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USDA raises food inflation forecast for fourth month in a row

Bird flu outbreaks are driving up egg and poultry meat prices far faster than usual, with eggs expected to cost 20% more and poultry 9% more this year than their 2021 averages, said the Agriculture Department on Wednesday. USDA economists raised their forecasts of food inflation for the fourth month in a row, to the highest rate since the end of the Carter presidency.

“An ongoing outbreak of highly pathogenic avian influenza has reduced the U.S. egg-layer flock and drove a 10.3% increase in retail egg prices in April,” said the USDA in its monthly Food Price Outlook. “Retail poultry prices have been high, with historically low stocks of frozen chicken (also called 'cold storage'). The ongoing highly pathogenic avian influenza outbreak has also contributed to increasing poultry prices as over 38 million birds have been affected.”

The USDA forecast an annual food inflation rate of 7%, which would be the highest since the 9.8% rate in 1981, the year President Reagan took office. The USDA’s predicted grocery inflation rate of 7.5% would be the highest since 8.1% in 1980, the last year of the Carter era.

Food inflation was broad-based, said the USDA, so increases in the overall inflation rates “were driven by increases for many products.” A month ago, it forecast that all food and grocery prices would rise an average of 5.5% this year.

The USDA forecast that prices for fats and oils would rise by an average of 10.5% this year, compared with the usual 2.3%. The predicted 9% increase in poultry prices is nearly four times the usual rate. A 7% increase was forecast for the category of beef, pork, poultry, and other meats, more than double the long-term average of 3.2% a year.

Fruit and vegetable prices were also forecast for a 7% annual increase, compared with the usual 2%. Cereal and bakery products, with a long-term average annual increase of 2.1%, were forecast to rise 7.5% this year.

Produced with FERN, non-profit reporting on food, agriculture, and environmental health.
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