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When will prices go down?
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Updated On: Oct 08, 2008 (08:16:00)
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The Food Consumer Price Index is expected to increase 4.5 – 5.5% in 2008, and 4.0-5.0% in 2009 Source: USDA Economic Research Service, CPI for Food Forecasts. "Food Inflation Rate may be 9% through 2012, Economist Says," June 12, 2008. Alan Bjerga. U.S. Bloomberg press.
Forward-buying and contracts It might not be the worst, as some businesses in the food chain had locked in cheaper commodity prices through contracts. As these contracts expire, they will have to pay prices that reflect the current and expected market prices of products. "To date, consumers have been protected from some of the effects of rising commodity prices by the multi-year commodity hedging contracts that many food processors have in place, which locked in commodity prices before they began their rapid assent." "Rabobank Report Shows Current Consumer Habits are Not Based on Price Alone," August 28, 2008. Staff writer. PR Newswire.
Biofuels future - The popularity of biofuels and government subsidies for the industry continue.
- Scientists are testing the overall cost of higher-carbohydrate foods such as sweet potatoes and cassava – to be used for ethanol.
"Economist Says Ethanol Industry will Keep Crop Prices High," May 1, 2008. Matthew Perrone. Associated Press State & Local Wire. "Sweet Potato Out-Yields Corn in Ethanol Production Study," August 20, 2008. Don Comis. USDA Agricultural Research Service
New equilibrium Some economists caution that food prices were abnormally and artificially low in the U.S. before the recent inflation. All of the above information is presented as evidence of research and public opinion. We do not claim to list all of the relevant factors that might lead to continued food price inflation. Nor do we endorse any specific opinion or research.
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