USDA: Expect higher food prices in 2013
The drought will start to impact food prices next year.
The ongoing drought in America’s Heartland is expected to ripple through to food prices by next year, boosting them by 3 to 4 percent, the U.S. Department of Agriculture said Wednesday.
It’s still early for adjusters to pinpoint the severity of crop losses, but some of the first claims started trickling in a few weeks ago, said Laurie Langstraat, a spokeswoman for Overland Park, Kan.-based National Crop Insurance Services.
“We haven’t had any rain in a long time,” she said. “It’s probably not going to be great, but we just don’t know.”
The USDA expects the severe drought in the Midwest to affect prices for field crops such as soybeans and corn, consequently raising retail food prices, according to the report summary. But it could take several months for commodity prices to mean higher prices at the grocery store.
The USDA kept its 2012 inflation prediction for food prices at 2.5 percent to 3.5 percent. But next year, most animal-based food products will see strong inflation because of higher feed prices. Also, inflation will exceed historical norms for foods such as bakery items and cereals, though it could take 10 to 12 months for price changes of packaged and processed foods to reach shelves, the USDA said.
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