Although food inflation this year was at its lowest level since 1992, the USDA announced that it expects 2011 levels to move quickly upward as a result of higher commodity prices this summer.
“Although inflation has been relatively weak for most of 2009 and 2010, higher food commodity and energy prices are now exerting pressure on wholesale and retail food prices,” said the USDA in its most recent report. “Hence, food inflation is predicted to accelerate during the final months of 2010 and the first half of 2011, leading to a forecast of two to three percent food price inflation in 2011.”
Dairy is expected to increase as much as 5.5 percent over 2010 prices. Butter has already registered a spike, with prices up more than 19 percent from September 2009. Egg prices also are up significantly and are hovering more than 11 percent above their September 2009 levels.
A number of major food companies and ingredient suppliers have already announced that they intend to raise their prices in order to offset the increased costs.