U.S. food prices seen up 4-5 percent

U.S. consumers can expect to pay 4 to 5 percent more for food by late this year than at the end of 2009 largely because of higher costs for such staples as beef, dairy, and pork, a Nebraska-based economist told Reuters.

"We have beef, pork, and dairy prices all increasing substantially since December, in the area of roughly 10 percent," Bill Lapp, economist and president of Advanced Economic Solutions, told the Reuters Food and Agriculture Summit on Tuesday. "Because food manufacturers and restaurants tend not to be philanthropic organizations, they are going to pass those costs on to their consumers."

As a result, Lapp predicted food prices could be 4 to 5 percent higher by December versus a year earlier.

Food inflation, like overall inflation, has been tame for the past few months. But food inflation should gain traction as the year proceeds, Lapp told Reuters.

Higher meat prices are due to cattle and hog producers shrinking herds after years of losses. That should mean less beef and pork, with USDA estimating 2010 U.S. beef production down 1.3 percent from 2009 and pork production down 2.5 percent.

Milk production this year may be similar to 2009’s, but USDA estimates wholesale milk prices up 21 to 26 percent this year and cheese prices up 16 to 20 percent. Analysts attributed those increases to less cheese production and stronger exports of dairy products.