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While the Food Institute reports that the overall Consumer Price Index in November fell 0.5% from October, retail food prices dropped just one-tenth of a percent based on unadjusted data from the Bureau of Labor Statistics and were still up 1.3% from the prior year. The retail food inflation rate continued to trail wholesale price advances again in November – the seventh straight month this has occurred. Retailers are clearly trying to temper the impact of higher prices on their shoppers, faced with increased competition on a number of fronts and a very budget minded consumer.
On average, wholesale food costs take about 90 days to be passed on to consumers, according to the Food Institute. And food inflation looks like it will escalate further in early 2013, steered by higher meat costs, particularly beef and poultry. In recent bouts with higher wholesale prices however, food retailers absorbed an increasing share of those costs but for 2013 we see retailers passing along more of the increases they experience.
Beef will be a major factor in rising food costs as wholesale prices are already on the rise after being tempered by an increase in slaughtering activity in the Fall as producers were faced with higher feed costs. The Food Institute foresees retail prices will be headed higher through February.
And as has been widely noted in the press, the November average Retail Choice beef price, at $5.15 per pound, was well above October’s price and set a new record. Those higher costs will likely mean less beef is consumed in 2013 than prior years, and USDA is projecting per capita consumption of beef will drop over two pounds in 2013, to 52.5 pounds per person. For more, just visit foodinstitute.com