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USDA Raises Inflation Estimate

WASHINGTON — The average consumer price index for food purchased at supermarkets is expected to rise 4% to 5% this year, due primarily to rising commodity and energy prices, along with strengthening global food demand, the U.S. Department of Agriculture's Economic Research Service reported last week.

Meat, egg and dairy prices have been particularly hard hit by price inflation this year due to rising costs for feed, in addition to efforts by producers to trim herds and flocks in recent years. In September, beef and dairy prices were up more than 10% compared with September 2010. Prices for pork, poultry and seafood have all risen between 7.5% and 8% during the same period. Fresh fruit prices are up almost 9% and fresh vegetable prices have risen 6.5%.

Supermarkets have been more successful than the foodservice sector in passing along these price increases to consumers. The ERS estimates that “food away from home” prices will only increase 3% to 4% this year.

The agency expects inflationary pressures to ease somewhat in 2012, but warns that food price inflation will still most likely remain higher than historical norms.

“Price levels in 2012 will hinge significantly on several macroeconomic factors such as weather conditions, fuel prices, and the value of the U.S. dollar (an indicator of global demand),” the report states.