USDA Says Food Prices Could Spike by 4%

WASHINGTON—Weather patterns have been less than cooperative for food producers in recent months, and the U.S. Department of Agriculture (USDA) predicts the cost of beef, poultry and eggs will likely spike due to severe weather and drought in much of the United States.

According to USDA, the food, food-at-home and food-away from home Consumer Price Indexes (CPIs) will increase 2.5% to 3.5% above levels in 2013, assuming normal weather conditions. The CPI for all food prices rose 1.4% last year.

Cattle and wholesale beef prices increased by 1.1% and 2.4% in February, while egg prices also rose by 20% in February after falling 28% in January, USDA said. Processed, shelf-stable food prices are also predicted to rise by 2% to 3% in 2014, and dairy prices could rise as well due to shrinking U.S. dairy herds. USDA said retailer profit margins could expand this year, which contracted since droughts conditions in 2012, contributing to inflation.

"While not unusually large, these changes indicate that the record-high supermarket beef prices across the country are here to stay for the coming months," USDA told Reuters.

A recent agriculture analysis shows harsh weather conditions will drive up prices in grocery stores, forcing consumers to become a bit more choosy with what they put in their carts. Drought conditions in California, a top vegetable and nut producer in the United States, could also mean fewer of these products and an increase in prices from 5% up to 20%. Plus, drought conditions in Oklahoma will only add to already low amounts of cattle, driving beef prices even higher.

The Porcine Epidemic Diarrhea Virus (PEDV), a deadly virus killing off baby pigs, could also negatively impact pork prices this year and further add to the meat-eater's dismay.

Today's meat shopper may be more focused on convenience rather than price, however, and changing eating habits are also affecting how people buy meat. According to the slide show The Changing World of Meat, from Food Product Design's FoodTech Toolbox, consumers' changing perceptions of meat may affect how consumers choose to buy their meat products in upcoming years.

If price hikes in meat, eggs, vegetables and nuts weren't enough, citrus fruit growers have also experienced drought and a severe freeze in December, according to the California Farm Bureau Federation. Between 20% and 40% of fruit on trees at that time has been lost, which may cause consumers to see higher prices on citrus at the grocery store.