Remember, at the height of this summer’s drought, all the dire predictions that made headlines of food shortages and massive food price hikes? So far, none of that has come true. Shoppers paid about 2 percent more for groceries during the third quarter, according to the American Farm Bureau Federation’s Quarterly Marketbasket Survey. “Primarily the increase was driven by a handful of items: some breakfast-related items, eggs for instance, and apples. Other than that, a fairly stable market basket. And while the quarter-to-quarter number was up, if you look at where the marketbasket value is compared to a year ago, it’s actually down a little bit,” said Bob Anderson, economist with AFBF. He added it is too early to see much if any impact at the retail level from this summer’s drought, “There are some fairly long lags involved between when we see an effect at the farm level in raw commodity prices and when we expect to see that show up in food prices. So even though there’s been a lot of talk about drought and certainly the drought has been the major event in commodity markets this summer, it’s really way too early to expect to see that show up in the retail price of finished food products.”
Another factor keeping a lid on food prices is the price of energy. Anderson said, “One of the things we’ve really seen some stability in the last year or so, certainly relative to where we were a couple of years ago, is in energy prices. Now certainly energy prices are higher than a lot of us would like them to be, but they’ve been fairly stable for the last few months and I think that’s been a feature in maybe slowing down some of this volatility that we have seen in food prices.”
So does this mean consumers can expect a big jump in food prices in 2013? Again Anderson says no, “There’s been a lot of talk in the news with the drought with the ‘aporkalypse’ or ‘hamaggedon’ or whatever you want to call it that made the news a month or so ago. A lot of concern about food prices as we move forward into next year. I think what our survey shows is that it’s certainly premature to get excited about that. At this point we don’t see much indication at all really of food price inflation starting to escalate.”
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