Inflation Seen Moderating, But …

Food inflation should moderate this year, but the degree to which prices are lowered could be impacted by reductions in supply and by the strength of the dollar against foreign currencies, according to a presentation by Food Institute yesterday.

ELMWOOD PARK, N.J. — Food inflation should moderate this year, but the degree to which prices are lowered could be impacted by reductions in supply and by the strength of the dollar against foreign currencies, according to a presentation by Food Institute here yesterday.

Noting that the slowdown in food-price inflation has been driven by the drop-off in demand, Kenneth Zaslow, an analyst at BMO Capital Markets, New York, said that production cuts “may reignite inflationary pressures.”

The strong dollar could continue to curb demand for exports, however, helping keep prices low for domestic buyers. “It’s a question of when, not if, inflation will return,” he said.

Ephraim Leibtag, an economist for the U.S. Department of Agriculture, said during the call that he expects the food component of the Consumer Price Index to rise a little over 3% in 2009, after a 5.5% rise in 2008.

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