Pricey meat to boost food prices 4-5 percent in '09: U.S.

By Charles Abbott

WASHINGTON (Reuters) - Higher beef, pork and chicken prices, driven up by sky-high grain prices, will fuel an increase of 4 to 5 percent in U.S. food prices in 2009, the third year in a row of hefty increases, the government forecast on Wednesday.

Food prices are estimated to rise by 5 percent this year, the largest annual increase since 1990. They rose by 4 percent in 2007, after years of trailing the overall inflation rate.

In its first estimate for 2009, the Agriculture Department said food prices would rise by 4 percent to 5 percent for the year, led by red meat and poultry, which account for 10 percent of food spending. Beef prices will rise by 6.5 percent, it estimated, and pork and poultry by 5.5 percent.

USDA economist Ephraim Leibtag, who prepared the forecast, said higher feed costs "will impact the meat industry, supplies and production will tighten, and prices will rise."

Earlier this month, USDA estimated per-capita meat consumption would drop by 4.6 lbs, or 2 percent, to 215.8 lbs (98 kg) in 2009 as livestock producers trim output.

Corn, wheat and soybean prices at the farm gate are at record highs.

"We're still going to have higher prices but the rate of increase is going to slow down a bit," Leibtag told USDA's radio news service in sizing up 2009.

For this year, the biggest price increase are forecast for eggs, up 14 percent, cereals and bakery products, up 9.5 percent, and fats and oils, up 12 percent.