August 26, 2014

Drought and disease have led to rising retail prices for several US meats, which had already reached record highs, according to the USDA.

However, overall food cost increases remain near long-term averages.

The agency forecasts pork, beef and veal prices to rise by 6.5% to 7.5% in 2014, up from 5.5% to 6.5% forecast a month ago. The overall "meats, poultry and fish" category will rise by 4% to 5%.

Overall US food inflation will be 2.5% to 3.5% in 2014, in line with historical norms, and is expected to be slightly lower at 2% to 3% in 2015, the USDA said.

Since 1990, US grocery store prices have risen by an average of 2.8% annually.

The USDA said that although food-at-home prices increased more in the first half of 2014 than in the whole of 2013, the lower prices outlook for commodities, such as corn and soybeans, as well as rising animal inventories, should provide relief.

Record high pork prices are partly due to the impact of a virus which has killed millions of piglets, as well as the higher cost of pork imports from Europe. For this year through July, retail pork prices jumped near 11%.

Meanwhile, the lowest US cattle inventories in more than 60 years are expected to drive up wholesale beef prices by 10% to 11% this year, with much of that increase passed down to consumers.

"The ongoing drought in California has raised concern over rising produce prices. However, the California drought has not yet had a discernible impact on national prices," the USDA said.

Currently, most of California remains in an "exceptional" drought, according to a local drought monitor.