USDA expects retail food prices to increase 3.5% to 4.5% this year, which would mark largest increase since 2008

Nevin Barich

LOS ANGELES , October 26, 2011 (Industry Intelligence) – The U.S. Agriculture Department (USDA) said it expects retail food prices to increase 3.5% to 4.5% this year, which would mark the largest increase since 2008 when prices rose 5.5%,The Wall Street Journal reported Oct. 26.

Last year, food prices rose 0.8%, the slowest rate since 1962.

The USDA had been predicting an increase of 3% to 4% since February.

The nation's big food manufacturers and supermarkets are having some success in passing along some of the pent-up costs from the farm commodity price boom that began with grains back in 2007. That said, several shoppers are trading down to cheaper products, resulting in many supermarkets and vendors sacrificing volumes on products targeted for price increases.

Meanwhile, restaurant chains are having a harder time passing along their higher ingredient costs, as consumers opt to save money by eating at home. Retail grocery prices were 6.3% higher in September year-over-year, according to the Bureau of Labor Statistics. Retail prices of food eaten away from home were up 2.6%.

The primary source of this article is The Wall Street Journal, New York, New York, on Oct. 26, 2011.

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