(Updates with comment from economist in eighth paragraph.)
Feb. 23 (Bloomberg) -- U.S. consumers will pay 2.5 percent to 3.5 percent more for food in 2012, unchanged from last month’s forecast, the Department of Agriculture said today in a report on its website.
Prices of fats and oils may rise as much as 4.5 percent this year, a full percentage point increase from last month’s estimate and the agency’s only upward revision, according to the report. An increase in crop production will contribute to lower commodity costs, Joe Glauber, the USDA’s chief economist, said today at a government forum on agriculture in Arlington, Virginia.
“Where it looked like earlier this year we would see a bout of new inflation, now it looks like it will moderate,” Glauber said.
The U.S. corn crop may rise as farmers plant the most acres since World War II, the USDA said today. Average prices received by farmers in 2012 will fall 19 percent to $5 a bushel from last year, wheat will slide 14 percent and soybeans may drop 1.7 percent, Glauber said.
“While supplies still remain tight for feed grains, slowing growth in biofuels and a return to trend yields should result in a rebound in corn stocks this year,” Glauber said in a speech. “Over time, that should help relieve some of the volatility that has roiled markets over the last several years.”
Cracker Barrel, Denny’s
Cracker Barrel Old Country Store Inc. said on Feb. 21 that costs are up “sharply” for beef, eggs, seafood and coffee, and food expenses jumped 6 percent in the quarter ended Jan. 27. Denny’s Corp., a family restaurant chain with 1,600 locations, said in January it was raising prices to help make up for higher commodity costs.
Starbucks Corp., the world’s biggest coffee-shop operator, has also been raising prices.
“Food prices really surged at the end of 2011, which isn’t good news to consumers, but it means that we started at a higher base for 2012,” Richard Volpe, a USDA food economist, said in a presentation at the conference.
Costs this year will rise as much as 4.5 percent for meat products and baked goods as gains in raw materials in the fourth quarter ripple through the food chain, the USDA said today in a note with its report.
“We are at a new plateau” of higher commodity prices, Bill Lapp, the president of Advanced Economic Solutions, an Omaha, Nebraska-based research company, said in a presentation at the conference. “We’re not going back to where we were.”
Retail-food costs rose 3.7 percent in 2011, the USDA said last month. World food prices fell 5.8 percent last year after reaching a record in February, according to United Nations data. Global costs increased 1.9 percent in January, while U.S. monthly inflation was 0.6 percent.
--With assistance from Whitney McFerron and Leslie Patton in Chicago and Catherine Larkin in Indianapolis. Editors: Patrick McKiernan, Thomas Galatola
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