An economist with Wells Fargo says rising dairy and meat prices will double the pace of U.S. food inflation next year.
Michael Swanson tells Bloomberg.com that as livestock supplies shrink and the rebounding economy boosts demand, food prices may jump as much as six percent in 2010. In late November, the USDA forecast a three to four percent jump in food prices next year, after an estimated 1.5 to 2.5 percent rise in 2009.
Economist Bill Lapp with Advanced Economic Solutions agrees. He predicts retail food costs will increase four to five percent in 2010. He says dairy prices will rise as much as 20 percent, leading the increase in food costs.
The Bloomberg article points out that pork producers are cutting the domestic breeding herd to the smallest level since the USDA started collecting data in 1964. The U.S. beef-breeding herd is the smallest since data collection started in 1971. Chicken output is also sliding, with the number of eggs placed into incubators each week headed to the lowest quarterly average since 2002.
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