Food costs will rise as much as 4% this year, more than the 2% to 3% estimated last month, after a surge in prices for farm goods, the U.S. Department of Agriculture said Thursday.
Forecasts were raised for meat, eggs, cooking oils, fruits and vegetables, sweets and cereals and baked goods as food inflation accelerated at the fastest pace since reaching a 28-year high in 2008, the USDA said in a report. Higher costs for corn, the primary feed for pigs and chickens, may boost pork prices as much as 6.5% and eggs 4.5%.
"Higher prices for crops and livestock will again pressure food prices," as increased commodity costs work their way through the food-supply chain toward consumers, chief economist Joe Glauber said.
Global food prices rose 25% last year and set a record last month as world grain inventories were headed for a 13% decline before the next harvest, the USDA estimated. Tighter supplies and higher costs have contributed to unrest in North Africa and the Middle East as rising demand causes isolated food shortages and accelerated inflation in poor countries even as it boosts incomes for U.S. farmers.
While corn production in the U.S., the world's largest grower and exporter, will jump to a record 13.73 billion bushels this year as farmers plant more, rising demand will limit gains in stockpiles, Glauber said. Inventories as of Aug. 31, 2012, will rise to 865 million bushels from 675 million expected this year, he said.