Food prices will climb a modest 3 percent this year, close to the long-term average of 2.8 percent, said USDA in a monthly update. “Inflationary pressures are expected to be moderate, given the outlook for commodity prices, animal inventories, and ongoing export trends,” it said. Pork and beef prices continue to rise. Beef is forecast to climb by 7 percent and pork by 6 percent this year. Pork supplies are tight due Porcine Epidemic Diarrhea Virus, which has killed millions of piglets. The cattle inventory is the smallest since 1951 and despite an improvement in pasture conditions in the West, “there are not yet any signs of herd expansion,” says USDA.
For the new year, food inflation is forecast for 2.5 percent. “Meat prices will likely continue to experience the effects of the Texas/Oklahoma drought and Porcine Epidemic Diarrhea virus (PEDv) in the immediate future, as farmers’ decisions on calving and herd sizes based on current conditions are felt down the line due to the 6- to 18-month production process,” said USDA.