Give Thanks for Low Food Prices as They’ll Rise Next Year
Americans may want to freeze the leftovers from Thanksgiving dinner, as retail food prices are expected to rise next year, sparked by the the country’s worst drought in more than half a century.
The dry conditions sent corn futures to a record and wheat prices to the highest in four years. They had less of an effect on food costs than expected earlier this year because slowing economies and oil demand have offset price pressures, economists say.
Thanksgiving dinner will cost only 0.6 percent more than in 2011, the American Farm Bureau Federation said, with a 3.1 percent jump in turkey prices leading the way.
Next year, retail poultry prices are projected to increase as much as 4 percent, beef by 5 percent and dairy products by 4.5 percent because of higher feed prices and as herds thinned by the drought tighten supplies, the U.S. Department of Agriculture said. The drought’s effects on food prices may linger as late as 2016, said Christopher Hurt, a livestock economist at Purdue University in West Lafayette, Indiana.
“We haven’t seen the full adjustment from the drought yet. That takes time,” Hurt said.
The drought in the Midwest and Great Plains drove corn yields to a 17-year low and may last at least through February. U.S. consumers will pay 3 percent to 4 percent more for food next year, a half-percentage point above this year’s expected increase, according to the USDA. The overall inflation rate in the year through October was 2.2 percent, according to the Labor Department’s Consumer Price Index.