USDA: Produce prices headed for biggest gain in years

04/26/2011 02:29:24 PM
Bruce Blythe

U.S. supermarket fruit and vegetable prices in 2011 are expected to post the largest increase in three years, according to a government forecast, reflecting harsh winter weather and rising fuel costs that have contributed to Americans’ escalating grocery bills.

Nationwide, retail prices for fresh fruits and vegetables are projected to rise 3.5% to 4.5% this year on average compared to 2010, the U.S. Department of Agriculture said April 25 in an update to its food inflation forecasts.

The projected increase, up from a USDA forecast in March for a 3% to 4% rise, compares to a 0.2% increase in 2010 and would be the biggest annual gain since fruit and vegetable prices jumped 5.2% in 2008.

“Prices will rise, relative to 2010, for all major food categories,” Richard Volpe, an economist with the USDA’s Economic Research Service, said in an April 26 e-mail. “While meat and dairy is projected to see the sharpest increases, fruits and vegetables are going up significantly as well.”

Retail prices for some fresh fruits and vegetables surged earlier this year after freezing weather destroyed crops in key growing areas of Mexico, Arizona and Florida, leading to shortages of some products.

Additionally, a weak dollar is fueling agricultural exports, making U.S. products cheaper for some foreign buyers, Volpe said.

“Fuel prices are up, which increases production as well as shipping costs,” Volpe said.

Based on a broader index that includes produce as well as meat and other categories, prices for food consumed at home are forecast to rise 3.5% to 4.5% this year, the USDA said. That’s up from a 0.3% increase in 2010 and would be the largest full-year gain since prices rose 6.4% in 2008. 



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