Following is the text detailing forecasts for percentage changes in annual food prices, according to the U.S. Department of Agriculture:
In 2011, the Consumer Price Index (CPI) for all food is projected to increase 3 to 4 percent. Food-at-home (grocery store) prices are forecast to rise 3.5 to 4.5 percent, while food-away-from-home (restaurant) prices are forecast to increase 3 to 4 percent. Although food price inflation was relatively weak for most of 2009 and 2010, cost pressures on wholesale and retail food prices due to higher food commodity and energy prices, along with strengthening global food demand, have pushed inflation projections for 2011 upward.
The all-food CPI increased 0.8 percent between 2009 and 2010, the lowest food inflation rate since 1962. Food-at-home prices increased by 0.3 percent--the lowest annual increase since 1967- -with cereal and bakery product prices declining 0.8 percent and processed fruit and vegetable prices dropping 1.3 percent. Food-away-from-home prices rose 1.3 percent in 2010, the lowest annual increase for restaurant prices since 1955.
For 2012, food price inflation is expected to abate from 2011 levels but is projected to be slightly above the historical average for the past two decades. The all-food CPI is projected to increase 2.5 to 3.5 percent over 2011 levels, with food-at-home prices increasing 3 to 4 percent and food-away-from-home prices increasing 2 to 3 percent. While many inflationary pressures that drove prices up in 2011 are not expected to intensify and may even decrease in 2012, retailers have been slow to pass on cost increases to date. Price levels in 2012 will hinge significantly on weather conditions in the American Midwest throughout the remainder of the harvest season for major field crops. Because current USDA forecasts are based on a normal weather scenario, sustained heat or drought conditions resulting in reduced supplies and intensified inflationary pressure would result in revised ERS forecasts.
SOURCE: U.S. Department of Agriculture