Food price inflation will rise faster than normal in 2013, a trend the USDA blames on the drought.
The Department of Agriculture today lowered its estimate of the U.S. corn crop, an announcement that followed last week’s prediction that food price inflation will rise at a faster-than-normal rate in 2013 due to widespread drought across the U.S.
Rising food prices also prompted expressions of concern from The World Bank, which said in a release today, “The World Bank and its partners are monitoring this situation closely so we can help governments put policies in place to help people better cope.”
The USDA today reported that the U.S. corn crop has suffered its eighth straight week of worsening conditions, according to Bloomberg News. The agency announced that 24 percent of the nation’s corn crop was in good or excellent condition. Last week the share was 26 percent. Ratings for the soybean crop also fell, giving both crops their worst late-July estimate since 1988.
The USDA last week predicted the drought and resulting increase in corn prices would begin to affect prices at the supermarket beginning in the fall and food inflation would rise by 3 percent to 4 percent for 2013. So far the drought has most directly affected prices for beef, pork, poultry and dairy prices, particularly milk, which are expected to begin rising in the fall and to be 4 percent to 5 percent higher in 2013.
Higher corn prices will likely take up to a year to “move through to retail food prices” for processed foods, said the agency. The sweet corn eaten by humans, as opposed to the field corn used for animal feed, has not been greatly impacted by the drought so far.
Food inflation poses the greatest threat to poor and elderly populations. Retirees surveyed by Millionaire Corner in February cited inflation as their greatest financial concern, followed by the cost of health care and having adequate retirement savings.
The World Bank plans to help poor families cope with food price inflation through such short-term measures as school feeding program and food-for-work programs, said Jim Yong Kim, president of the group.