The Food Institute reports that although food price inflation at the retail level was greater than USDA expected in 2011 – coming in at 4.8 percent for the year compared to the 4.5 percent high-end projected – the Department’s Economic Research Service projects prices will increase no more than 3.5 percent in 2012 – based on current knowledge of course.
The Food Institute reports that although food price inflation at the retail level was greater than USDA expected in 2011 – coming in at 4.8 percent for the year compared to the 4.5 percent high-end projected – the Department’s Economic Research Service projects prices will increase no more than 3.5 percent in 2012 – based on current knowledge of course. That means that the average annual increase for food-at-home prices between 1990 and 2011 was 2.8 percent, and ERS's current outlook for 2012 falls within the historical average for food price inflation. Of course many factors may impact that projection on the up or the downside. For instance, farmers in the U.S. are apparently planting significantly more wheat than many had anticipated which could result in a greater U.S. wheat supply later this year along with forecasted larger crops in several other wheat producing nations.
Based on USDA’s data, meat and poultry prices are projected to rise greater than the average for food-at-home however, with beef expected to exceed 2011 levels by 4 percent to 5 percent and pork by 3 percent to 4 percent. Retail poultry prices are projected to rise 3 percent to 4 percent as well in 2012. Fish and seafood prices also are expected be up above the retail average, climbing 4 percent to 5 percent in 2012 – rounding out the center-of-the plate grouping. Thus, shoppers will again be spending more at meat and seafood counters in U.S. grocery stores this year.
Egg prices, which jumped 9.2 percent in 2011, are seen stabilizing in 2012, increasing 1 percent to 2 percent over prior year levels. The egg market is extremely volatile from year to year notes the Food Institute. For example, prices for eggs in 2009 fell nearly 15 percent and increased just 1.5 percent the following year.
USDA notes that the export market for milk will be a significant factor in the coming year, but current expectations are for retail dairy prices to increase 2 percent to 3 percent percent over 2011 levels.
Processed fruit and vegetable prices, which increased 2.9 percent above the 2010 level last year, are projected to climb 3 percent to 4 percent this year as the contracts within the processed fruit and vegetable industry have kept price inflation below that for fresh fruits and vegetables throughout 2011, but are expected to reflect increased fuel and commodity costs this year.
Soaring soybean prices pushed fats and oil prices up over 9 percent last year, but also are seen stabilizing somewhat in 2012, with prices seen climbing as much as 3.5 percent.
But as always, consumers have a variety of ways to adjust their behavior in order to cut costs in 2012, whether it be substituting lower priced poultry for beef, or switching to store brands or redeeming more coupons. Not to mention the option of relying on alternative format stores from dollar stores to drug stores in order to find lower prices.
As always, the Food Institute will be following these trends and the data that goes with it throughout the year. For more just go to www.foodinstitute.com.