There’s good news for shoppers in the latest Consumer Price Index update from the Department of Agriculture, released last week. Food prices in general should show little to no increase over last year. But there are a couple of exceptions and a couple more troubling caveats.
First the good news: The latest report by the USDA’s Economic Research Service predicts that supermarket food prices will increase only 2% to 3% in 2015. Fresh fruits and vegetables are predicted to increase less than 1%.
What will probably be more expensive is beef. Prices are predicted to increase by 5% to 6% as the effects of the Midwestern drought linger. Though the weather improved some there this summer, it takes cattle 16 to 18 months to reach maturity, so the effects remain.
Still, that’s a lot better than the 23.6% that beef prices increased in 2014.
Pork prices are on the way down. Pig farms in the Midwest were hit by a serious disease that pushed prices up 12% last year. The current prediction is a decrease of 2% to 3% in 2015.
Of course, all of this is only prediction, and the report points out a few important variables that could change the results.
The first is the length of the drought here in California, which could push some prices higher than predicted.
“Severe weather events could potentially drive up food prices beyond the current forecasts,” the report notes. “In particular, the ongoing drought in California could have large and lasting effects on fruit, vegetable, dairy and egg prices.”
California produces more than half of all the fresh produce grown in the US.
Also California-specific is the cost of eggs, or more specifically, the price of eggs following the imposition of Proposition 2, which mandated larger cages for laying hens.
“While this may cause higher prices in California, prices elsewhere may face downward pressure if out-of-state egg producers choose not to alter their facilities and look elsewhere within the U.S. to sell their eggs,” the report states.
And then, as always, there’s the cost of oil. When the report was prepared, the rising price of gasoline was not predicted to be a factor.
“If oil prices continue to fall or remain low throughout 2015, subsequent decreases in production and transportation costs may be passed on to the retail level,” the report says.
Far from going down, over the last five weeks, the price of regular gasoline in California has increased by a dollar a gallon.
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