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USDA report predicts higher grocery prices in 2011

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Get ready for bigger grocery store bills and larger restaurant checks.

The U.S. Department of Agriculture’s Economic Research Service released its 2011 Consumer Price Index analysis for projections on food prices this week. Its findings: Food prices overall are going to increase 2% to 3% this year.

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That price jump is expected to happen both at grocery stores and restaurants.

The inflation in food prices comes after a stretch of relatively low price increases in recent years. The agency’s all-food index showed a mere 0.8% increase between 2009 and 2010, and a rise of just 0.3% for food-at-home prices (the lowest food inflation rates since 1962 and 1967, respectively).

However, as commodity prices have jumped, and demand for ethanol increases amid growing energy prices, that all translates to higher prices for consumers in the grocery aisles.

One of the areas expected to be hardest-hit is meat, in part because feed prices surged last year. According to the USDA’s index, beef and pork prices were actually slightly down in December. However, beef prices were up 6.1% in December 2010 compared with a year earlier, while pork prices jumped 11.2% last month compared with December 2009.

-- P.J. Huffstutter

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