FOOD PRICES STABLE IN MOST CASES
A U.S. Department of Agriculture economist says food prices should remain fairly stable across the board.
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FEATURE – FOOD PRICES STABLE IN MOST CASES
INTRO: A U-S Department of Agriculture economist says food prices should remain fairly stable across the board. The USDA’s Bob Ellison has more. (1:29)
FOOD PRICES DID NOT GO UP MUCH IN TWENTY TEN AND SHOULD NOT INCREASE MUCH FOR THE REST OF THE YEAR. TWENTY ELEVEN COULD BE A DIFFERENT STORY, BUT NOT TOO DIFFERENT. EPHRAIM LEIBTAG WITH THE U-S DEPARTMENT OF AGRICULTURE’S ECONOMIC RESEARCH SERVICE SAYS WEAK PRICING HAS BEEN THE RULE FOR TWENTY-TEN.
Ephraim Leibtag, USDA ERS: Prices did not go up that much for the first half of the year. The last few months we’ve seen a little bit of a price increase, but overall for 2010 food prices are pretty tame. Probably about one percent increase overall for the year.
SOME FOOD PRICES HAVE GONE UP IN TWENTY-TEN…MOST NOTABLY PORK AND BEEF.
Leibtag: Those products have been up quite a bit for the last three or four months and now year over year they’re both up over five percent, which is noticeable, certainly when you compare it to everything else that’s either flat or in some cases falling.
AS FOR TWENTY-ELEVEN, LEIBTAG SAYS FOOD PRICES SHOULD INCREASE TWO TO THREE PERCENT.
Leibtag: That’s not too different from the historical norm. The reason why we are moving in that upward direction in addition to optimism about a recovering economy is these underlying commodities such as wheat, soybeans and corn, milk and meat products, that at the commodity and wholesale level have begun to rise and that will put pressure in the next three to six months and that will put pressure on retail prices we well.
AND WHILE CONSUMERS SEE RISING FOOD PRICES AS BAD NEWS, LEIBTAG SAYS MODEST INFLATION INDICATES AN IMPROVING ECONOMY. IN WASHINGTON, D-C FOR THE U-S DEPARTMENT OF AGRICULTURE, I’M BOB ELLISON.
Extra SoundBites:
1. LEIBTAG SAYS WEAK COMMODITY PRICES IS THE REASON FOR STAGNANT FOOD PRICES.
Ephraim Leibtag, USDA ERS: With recession at the end of ’08 and into 2009, and unfortunately into 2010 as well, we’ve had much weaker commodity prices until this summer. So the ingredient costs that go into food have been either stable or falling.
2. LEIBTAG SAYS FOOD PRICES SHOULD INCREASE IN 2011.
Ephraim Leibtag, USDA ERS: Those grain products that have been either flat or falling will probably start to turn positive. Another area where we have seen that transition is fruit and vegetables, which usually are on the high end, but in 2009 and 2010 have been negative or close to no change in prices for those products. And that’s probably going to be shifting in 2011 as well.
3. LEIBTAG SAYS INCREASING FOOD PRICES SHOULD BE A SIGN OF AN IMPROVING ECONOMY.
Ephraim Leibtag, USDA ERS: Having a little bit more inflation than where we’re at right now is better because it correlates with a stronger economy. In times of a growing economy, we would expect inflation, at least for food, to be in the two to three percent range. When it’s been at one percent or a half percent or zero that implies there are some problems in the economy as well.
4. LEIBTAG EXPLAINS THE POSITIVE SIDE OF INCREASED FOOD PRICES.
Ephraim Leibtag, USDA ERS: For consumers, if their employment prospects are improving, if job prospects are improving, if job prospects are getting better, the economy’s improving, then paying one or two percent more for food is a necessary outgrowth of that growing economy. On the other side producers are better off if there is a little bit more leeway to be able to pass on higher costs, so that’s what we kind of see for the upcoming year.
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