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Food prices expected to keep rising in 2012

TAMPA - A trip to the grocery store is going to cost more next year, according to a new report by the U.S. Department of Agriculture. Federal officials expect grocery prices to rise 3 to 4 percent overall in 2012. That change represents a slight tapering off from the 5 percent jump seen this year. But it's still dramatically higher than 2009 and 2010, when food-price inflation was the lowest since the 1960s. The jump in prices between 2010 and 2011 also turned up in the Tampa Tribune's own Market Basket survey of the region's main grocery stores in September. An analysis of grocery prices from each year showed sharp jumps in eggs and dairy products and week-to-week variations in meat prices. That pattern is likely to continue, but at a slightly muted pace, federal officials said.
"Right now trends for next year are some lightening of the inflation pressures," said Ephraim Liebtag, deputy director for research at the USDA's Economic Research Service. That's largely thanks to falling fuel prices, making it cheaper to supply farmers and for them to haul their products to market, Liebtag said. Gasoline prices last month were 23.4 percent higher than 2010, but the trend line was pointing downward, according to the Bureau of Labor Statistics, which calculates inflation rates. Still, falling fuel costs are being offset by rising costs for grain used to feed livestock. That's pushing up the costs of beef, pork and eggs more than the overall inflation rate for food. But even at an expected 5.5 percent growth this year, inflation rates for meat and eggs will be about half what they were in 2011. The price of eggs, which was nearly 23 percent higher in 2011 than 2010, has caught the attention of USDA officials because the nation's stock of egg-laying hens shrank in 2011. It's unclear how much that might push up egg prices next year, the USDA said. Pasco County egg farmer Wilton Simpson said feed prices have jumped 25 to 30 percent in recent years, driven up by demand in China and India for corn and soybeans. Those rising feed prices make up about half the change in the cost of a dozen eggs, he said. The rest of the increase has come from tightening regulations meant to improve conditions for laying hens. The cost of meeting those new demands has forced some farmers out of the business, Simpson said. Food prices are part of the federal Consumer Price Index, which determines the month-to-month rate of inflation. Because food and fuel costs can swing wildly, they're factored out of the core inflation rate, which has changed little in recent years. Core inflation was running 2.1 percent at the end of October. Meanwhile, food inflation was running at 4.7 percent, nearly double the long-term average rate. Rising food prices are both bad news and good news, Liebtag said. While they take a bigger bite out of household budgets, rising food prices are also a sign of economic growth, he said. "In 2009 and '10, inflation was too low," Liebtag said, "It meant things weren't improving."

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Food prices expected to keep rising in 2012