Are food prices going up?
The drought has been
making headlines for a couple of weeks now. In most cases, the stories don’t
stop with the drought; they go on to speculate about what will happen to food
According to the United States Department of Agriculture (USDA), typical grocery price inflation is 2.8% a year. USDA earlier predicted a grocery price increase of 2.5 - 3.5% this year and that prediction remains unchanged.
Any price increases because of the drought would probably be seen in 2013 or beyond; most of the corn and soybeans grown in the U.S. is used as feed for chickens, hogs and cattle. So the real impact will be seen after the fall harvest when shortages of those grains could drive up feed prices. Predicted price increases range from 2.5% for pork to 3% for eggs to 4 or 5% for beef.
According to the Bureau of Labor Statistics (BLS), the average cost for a dozen eggs is $1.67. An increase of 3% means the price would rise to $1.72. BLS reports the national average price for a pound of ground chuck is $3.45. An increase of 5% means the consumer would pay 17¢ more, or $3.62.
Food prices are rarely static; they are continually shifting based on political factors, the weather, economic development and other events around the globe, not just here at home.
In the U.S., we pay just 11% of our disposable income for food – 6% is spent on food eaten at home and 5% on food eaten away from home. That’s the lowest percentage of any nation in the world. The percentage of our income spent on food has trended downward for years; from a high of 23% in 1929 when the USDA started keeping statistics to 18% 50 years ago and holding steady at 11% for the past five years.
Despite the drought, we will continue to enjoy the safest, most nutritious and abundant food supply in the world.