Breakfast Gets Costlier as U.S. Ratchets Up Food-Price Forecasts -Breaking
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© Reuters. As the U.S. increases food-price forecasts, breakfast gets more expensive(Bloomberg) — Diners may want to think twice about going for an American breakfast, which is poised to get pricier this year in the U.S. Department of Agriculture’s latest monthly projections.
Choosing a cereal option, or going for fresh fruits, won’t provide relief, either.
Eggs are among the items seeing bigger price gains this year in the Agriculture department’s monthly outlook. This is a significant change from the previous three-month outlook, which predicted an increase of 0.5% to 0.5%. The same projections for bakery and cereal products as fresh fruit are 6%-7%.
According to the agency, food prices are expected to increase by 5% to 6 percent this year, which is at least twice the 2.5% forecasted just three months prior. Other categories with big increases compared with last month’s outlook are beef, poultry and vegetables. The USDA predicted little inflation or price drops for most food categories a year ago.
According to Bloomberg calculations, a 5.5% increase in the average household’s food budget would reduce budgets by approximately $450 annually.
There have been many factors that have caused food prices to drop. Crop flows from Ukrainian ports have been disrupted by that nation’s invasion by Russia. Also, spring planting was affected. Ukraine and Russia together account for over a quarter of the world’s trade in wheat and for about a fifth of corn sales.
“Among the nearly 50 commodity-price series we study, wheat spot-price changes stand out as a bellwether for food price inflation,” JPMorgan Chase & Co. (NYSE:) analysts Peter McCrory and Daniel Silver wrote in a note last week.
Wage inflation and rising energy prices have also put pressure on food prices.
“Given exceptionally tight labor markets and already-elevated inflationary pressure from commodity prices prior to Russia’s invasion of Ukraine, we suspect food inflation will remain firm in months ahead,” the JPMorgan analysts said.
According to Wall Street, an increase of 1% in wages within the food-services industry is associated with an acceleration of 0.34% in food inflation.
Albertsons Cos., the grocer said this month it expected food inflation to stay at an elevated level at least through September. In a Federal Reserve Bank of New York survey, consumers had 9.6% of their expectations regarding year-ahead price fluctuations in March. It was a record number for this data series.
©2022 Bloomberg L.P.
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