* Food prices to jump 2.5-3.5 pct in 2012; 3-4 pct in 2013
* Drought fuels food costs to out-pace other U.S. inflation
* Lofty corn, soybean prices will work way through food
By Russ Blinch
WASHINGTON, July 25 Food prices will race ahead
faster than prices of other goods in the United States this year
and next, due to the worst drought in more than a half a
century, the government forecast on Wednesday.
Food prices rose 3.7 percent in 2011, and American consumers
may pay 3.5 percent more at the grocery store this year, with
higher prices for meat, poultry and fruit, as the drought
gripping the U.S. farm belt drives up crop prices.
The U.S. Department of Agriculture forecast that food prices
would jump between 2.5 percent and 3.5 percent in 2012 and then
rise 3-4 percent in 2013.
"The drought is really going to hit food prices next year,"
said Richard Volpe, a USDA economist, adding the pressure on
food prices would start to build later this year.
"It's already affecting corn and soybean prices, but then it
has to work its way all the way through the system into feed
prices and then animal prices, then wholesale prices and then
finally, retail prices," Volpe said.
Food prices will rise far more rapidly than the overall U.S.
inflation rate, according to USDA, a turnabout from the usual
pattern. The U.S. inflation rate is estimated for 2 percent this
year and 1.9 percent in 2013. Food inflation was 3.7 percent
last year but only 0.8 percent in 2010.
Corn and soybeans have hit record highs on concerns the
drought will slash yields for grain that is already in tight
Corn for September delivery was up 3.5 cents on Wednesday to
$7.93 a bushel after forecasts showing the region could expect
only patchy rains and more of the scorching triple digit heat.