UPDATE 2-Citrus disease driving U.S. fruit prices higher - USDA

Wed Jun 25, 2014 10:57am EDT

(Adds table with USDA forecasts, other details)
    By Ros Krasny
    WASHINGTON, June 25 (Reuters) - Fallout from a devastating
citrus disease in Florida is the latest blow to American
consumers struggling with record-high prices for some meats and
overall higher food bills, the Department of Agriculture said on
Wednesday. 
    In a monthly report on the food price outlook, the USDA said
fresh fruit prices would jump by 5 to 6 percent this year,
against an earlier forecast of a 3.5 to 4.5 percent increase. 
    The agency highlighted a 22.5-percent jump in citrus prices
over the past year. As well as the lingering effects of a winter
freeze in southern California, orange crops have been slammed by
the plant disease known as citrus greening, which threatens to
undermine Florida's $9 billion citrus industry. 
    USDA evaluated expected increases in overall food,
food-at-home and food-away-from-home prices and concluded that
overall food inflation would be 2.5 to 3.5 percent, the same as
last month's forecast. 
    Although in line with historic norms - since 1990, grocery
store prices in the United States have risen by an average of
2.8 percent per year - the expected rate of increase is up from
just 1.4 percent last year. 
    Dairy prices were forecast to increase by 3 to 4 percent on
the year against an earlier 2.5 to 3.5 percent projection. 
    "Milk and dairy prices are higher due, in part, to strong
foreign and domestic demand and lower output per cow in the
Midwest," USDA said. 
    The agency in May raised its forecast for beef and veal
prices,  and maintained those levels in June. Beef prices are
expected to rise by 5.5 to 6.5 percent, and for pork prices to
gain by 3 to 4 percent. 
    U.S. beef prices are already up more than 9 percent so far
in 2014 as cattle inventories fall and beef exports increase.
Pork prices have shown similar gains in 2014. 
    "Most retail beef prices, on average, are at record highs,
even after adjusting for inflation," USDA said. 
    For pork, it added that the recent price surge - partly a
reflection of a killer piglet virus sweeping the country - could
be temporary since slaughter prices fell 10 percent in May. But
the sweet spot for the summer barbecue season could be poultry,
where prices are relatively flat.      
    USDA said it continues to track the effects of the ongoing
drought in California on fruit, vegetable, dairy, and egg
prices, and drought conditions in Texas and Oklahoma on beef
prices.      
    "Retailer margins, having contracted since the drought, may
expand in 2014 if input prices rise, which should contribute to
inflation," it added.     
    
 Consumer Price Indexes                Apr-M  Annual   Forecast      Forecast 
                                       ay     2013     2014 (June)   2014 (May)
 All food                              0.4    1.4      2.5 to 3.5    2.5 to 3.5 
                                                                     
     Food away from home               0.2    2.1      2.5 to 3.5    2.5 to 3.5 
                                                                     
     Food at home                      0.6    0.9      2.5 to 3.5    2.5 to 3.5 
         Meats, poultry, and fish      1.2    2.1      3.0 to 4.0    3.0 to 4.0
             Meats                     1.1    1.2      3.5 to 4.5    3.5 to 4.5 
                 Beef and Veal         0.1    2.0      5.5 to 6.5    5.5 to 6.5
                 Pork                  3.2    0.9      3.0 to 4.0    3.0 to 4.0
                 Other meats           0.3    -0.1     2.0 to 3.0    2.0 to 3.0
              Poultry                  1.2    4.7      3.0 to 4.0    3.0 to 4.0
              Fish and seafood         1.9    2.5      2.5 to 3.5    2.5 to 3.5
         Eggs                          -2.3   3.3      5.0 to 6.0    5.0 to 6.0
         Dairy products                0.6    0.1      3.0 to 4.0    2.5 to 3.5
                                                                     
         Fats and oils                 0.6    -1.4     1.5 to 2.5    1.5 to 2.5
         Fruits and vegetables         1.4    2.5      2.5 to 3.5    2.5 to 3.5
             Fresh fruits /vegetables  1.4    3.3      3.0 to 4.0    2.5 to 3.5
               Fresh fruits            2.0    2.0      5.0 to 6.0    3.5 to 4.5
               Fresh vegetables        0.6    4.7      2.0 to 3.0    2.0 to 3.0
         Processed fruits/ vegetables  1.5    0.3      2.5 to 3.5    2.5 to 3.5
         Sugar and sweets              -0.5   -1.7     1.0 to 2.0    1.0 to 2.0
         Cereals and bakery products   0.1    1.0      1.5 to 2.5    1.5 to 2.5
         Nonalcoholic beverages        -0.5   -1.0     1.5 to 2.5    1.5 to 2.5
         Other foods                   0.5    0.5      2.0 to 3.0    2.0 to 3.0
                                                                     
 
 (Reporting by Ros Krasny; Editing by Doina Chiacu and Susan
Heavey)
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