Food Prices to Rise 9% Annually

Holy Cow! How many of us get a 9% cost of living raise each year? Not me, not anyone that I-I-I know!

Food Prices to Rise 9%

WASHINGTON (Reuters) – U.S. food prices will rise a stiff 9 percent a year through 2012, the largest increase since 1979 and the result of record-high crop prices, the head of an economic consulting company said on Thursday.

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During a telephone news conference, Lapp said he was completing a new analysis of food and commodity prices. He foresaw average corn prices of $5.25 a bushel through 2012, with wheat around $6.50 and soybeans near $11.

“When I do that analysis and look at the relationship between that and food prices, I get a 2008-12 average annual rate of increase in the consumer price index for food of 9.0 percent,” he said.

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A 50 percent increase in corn prices was likely to result in a 1 percent increase in food prices, he said in February.

Lapp said crop prices will plateau at higher levels than prevailed through 2006, due to factors that include global economic growth, geopolitical uncertainties, the weak U.S. dollar, China‘s larger role in the world economy and the use of food to produce fuel.

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“There is virtually no cushion” to offset a poor harvest, said Collins, who is now a consultant.

USDA has predicted that prices of cereals and bakery products will zoom by 8 percent this year, and that eggs and fats and oils also will go up in price. Increases are expected in 2009 for meat, poultry and fish.