Food Inflation Rebounding

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Food inflation, like overall inflation, has been tame for the past few months. Bill Lapp, economist and president of Nebraska’s Advanced Economic Solutions, says - we have beef, pork, and dairy prices all increasing substantially since December, in the area of roughly 10 percent. Because food manufacturers and restaurants tend not to be philanthropic organizations, they are going to pass those costs on to their consumers. Lapp predicts retail food prices will be up 4 to 5 percent later this year.

Higher meat prices are a result of U.S. cattle and hog producers reducing herd numbers in reaction to losses they’ve endured. That should mean less beef and pork. USDA estimates 2010 U.S. beef production will be down 1.3 percent from 2009 and pork production will be down 2.5 percent.

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