September 24, 2011

US beef and egg prices forecast to rise in 2011

The US government raised its 2011 price projection for beef and eggs, but maintained its overall food-inflation estimate through next year.

Beef prices will be up 8% to 9% in 2011, up from a previous forecast of a 7% to 8% increase, the USDA said in a monthly report Friday (Sep 23).

Beef prices have soared to record highs this year thanks in part to strong export demand. Meanwhile, supplies are expected to tighten as ranchers liquidate their herds due to a severe drought in the southern Plains that has caused pastureland to wither.

The USDA also increased its overall meat price forecast for 2011 to 6.5%-7.5%, up half of a percentage point. It increased its projected hike in egg prices to 5%-6%, also up half a percentage point, noting that the inventory of hens decreased during five of the first seven months this year.

Overall food inflation was left unchanged, however, at 3% to 4% this year and 2.5% to 3.5% in 2012.

Commodity prices, which have driven the price hikes for consumers this year, have fallen sharply during the past month amid worries about the global economy. Prices for many commodities, ranging from corn to cattle, remain historically high, however.

Due in part to rising prices of grain and livestock, retail food prices are climbing faster than the general inflation rate.

While the federal government's all-items Consumer Price Index for urban consumers was 3.8% higher in August than in August 2010, the government's food CPI jumped 4.6% in August compared to August 2010.

According to the US Bureau of Labor Statistics, which compiles the consumer price index, retail prices for dairy products soared 9.1% in August from a year ago, while the index for meats, poultry, fish and eggs jumped 8.0%.

The Bureau of Labor Statistics does not forecast retail price inflation, which the USDA attempts to do only for food items.