Tags: US | usda | Warns | Quickly | Rising | Food | Prices

US Warns of Quickly Rising Food Prices in 2011

Wednesday, 26 Jan 2011 12:43 PM

Food inflation, already destabilizing emerging giants in Asia, is coming soon to the United States. The government expects rising commodity prices and energy demand for ethanol to push up food prices by between 2 percent and 3 percent in 2011, according to the U.S. Department of Agriculture's Economic Research Service.

Such a rise would be a return to normal food-price increases, according to the government.

Also, overall inflation may stay “officially” low, however, since the government regularly removes food and energy costs from its calculations.

“Although food-price inflation was relatively weak for most of 2009 and 2010, higher food-commodity and energy prices have recently exerted pressure on wholesale and retail food prices,” the USDA said in a release.

“Hence, higher prices are projected to push inflation toward the historical average inflation rate of 2 to 3 percent in 2011.”

Food prices have been stable for a few years rising 0.8 percent in 2010, the lowest rise in decades.

As animal-feed prices rise, that will affect the cost of meats like pork and beef. While flat in the short-term, beef prices are up 6.1 percent from December a year ago and pork has risen 11.2 percent in the same period, the agency reported.

China and India have been battling a surge of food-driven inflation for several months. Trying to get ahead of prices, banks have raised lending rates well over government-set benchmarks, according to local press reports cited by Bloomberg News.

Of course, China dumped billions of yuan into its economy to offset the global collapse, setting off a property boom. Now it has to march double-time to keep inflation in check.

China’s official consumer price index rose 4.6 percent year over year in December after putting on 5.1 percent annualized in November.

Academics in Beijing have taken the U.S. Federal Reserve to task for its program of printing dollars to buy up Treasury bonds in order to keep U.S. interest rates low.

Their claim is that the increase in dollars worldwide — or at least the prospect of a flood of dollars — is driving inflation higher in developing countries.

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Food inflation, already destabilizing emerging giants in Asia, is coming soon to the United States. The government expects rising commodity prices and energy demand for ethanol to push up food prices by between 2 percent and 3 percent in 2011, according to the U.S....
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Wednesday, 26 Jan 2011 12:43 PM
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