NEW YORK — Food price inflation will return in 2010, led by an increase in milk, beef, pork and chicken prices, according to Michael Swanson, a senior economist at Wells Fargo, in a report for Bloomberg NewsWire.
Swanson predicts that food prices could rise as much as 6% next year, and that meat and dairy costs will be affected by rising demand, rising prices for corn and animal feed, and lower supplies, caused by production cuts that suppliers made in 2008 and 2009.
“Protein inflation is going to be much higher than people are anticipating,” Swanson told Bloomberg.
“Corn is a proxy for feed costs, and right now the value of all meat and dairy output is below the price of feed on a long-term relative basis.”
U.S. Department of Agriculture officials, however, are predicting much milder food price inflation in the coming year.
Ephraim Leibtag, the USDA's food price forecaster, told Reuters this month that an economic recovery in 2010 might bring about a 3% to 4% increase in the price of food, due to rising demand.
Leibtag said he expects those gains to come primarily from increases in seafood and produce, but that beef and pork would likely rise less than 2%. If there is no economic recovery, any broad increase in food prices is less likely.
“Right now, the factors are not in place to repeat what we saw in 2008,” Leibtag told Reuters.