U.S. Department of Agriculture warns that soaring agricultural products will boost food prices in 2011

USDA maintains its expectation that food prices will increase by 0.5%-1.5% and 2%-3% in 2010 and 2011 respectively, and warns that the general increase in agricultural product prices will significantly boost food prices in 2011, and food price growth. It will not be surprising to reach the expected ceiling.

The comprehensive media reported on October 26 that the United States Department of Agriculture (Agriculture Department) maintained on the 25th that the food price inflation in 2010 will remain an exceptionally mild expectation, but warned that the general surge in agricultural product prices since mid-summer will be in 2011. Embarrassing consumer wallets.

On the 25th, the US Department of Agriculture announced its monthly food price inflation expectation report. The report maintains the expectation unchanged at the end of August. It is expected that the food item index of the consumer price index closely watched by the government will increase by 0.5%-1.5% in 2010. This is the smallest increase since 1992.

The department also expects that the increase in retail food prices in 2011 will climb to a more representative level of 2%-3%, which is also in line with expectations in August.

However, Ephraim Leibtag, an economist at the Ministry of Agriculture responsible for the preparation of the report, said that soaring commodity prices such as corn and wheat have increased the chance of food inflation rising to the upper limit of the expected range in 2011. Leibtag said, "If the current situation continues, I would not be shocked if food inflation rises to 3%."

It is very difficult to predict food inflation in 2010. Although the U.S. economic performance was weak, the prices of agricultural products soared. Many executives in food manufacturing and supermarkets are under pressure to pass on the rise in raw material costs entirely to consumers, as consumers seem to be more willing to patronize special offers.

The pressure on rising food prices is mainly due to the fact that, driven by strong demand from emerging economies such as China, US agricultural exports have soared. Currently, the economies of these emerging economies are recovering from this global economic recession at a faster rate than developed countries. . At the same time, the supply of beef and pork products has been strained due to production cuts by US farms during the recession.

Specifically, compared to a year ago, Texas steers prices rose by 19%, red soft wheat by 82%, butter by 74% and corn by 42%.

Last week, some major food companies began to hint that they intend to increase the price of some products. General Mills said it will raise the price of breakfast cereals in November, and fast food giant McDonald's Corp. also said it will increase the price of the menu.

But other companies still choose to cut prices to appease consumers who have been physically and mentally exhausted by the recession. Last week, supermarket chain Supervalu cut its earnings guidance targets to meet its competitors’ continued price cuts.

Economists believe that the stubbornly high unemployment rate is a heavy shadow over food prices. Not only does it encourage businesses to be more sensitive to prices, but it also limits labor costs. However, this has somewhat eased pressure from manufacturers to raise prices. In addition, the fact that energy costs are basically flat also provides a buffer for some manufacturers.

Ryland Maltsbarger, senior economist at IHS Global Insight, an economic forecasting agency, predicted on the 25th that retail food prices will rise by 0.9% in 2010 and will increase by 2.5% in 2011. Maintaining the stability of labor and energy costs will help stabilize prices.