Prices for livestock, grain and other unprocessed food products in August posted the largest increase in six months, the government said, indicating that consumers grappling accelerating grocery costs face even higher costs in the months ahead.
An index of U.S. crude food prices rose 4.7 percent last month compared with the same month a year earlier, according to the Bureau of Labor Statistics’ Producer Price Index (PPI) report for August, released Sept. 14: http://1.usa.gov/nAZD6u. That was the largest year-over-year increase since a 6.8-percent jump in February and compares with a decline of 0.8 percent in July.
The government’s crude foods index reflects grains, livestock, milk and other unprocessed goods that are eventually destined for the supermarket shelf.
Record-high prices for cattle, hogs and other farm products have been filtering through to the supermarket for more than a year, contributing to food inflation that’s increasingly pressing consumers also dealing with high unemployment and expensive gasoline. Grocery food inflation is expected to rise 3.5 percent to 4.5 percent this year, which would be among the four largest annual increases over the past two decades, according to a government forecast.
Prices for corn, which is fed to livestock and is an ingredient in many foods, soared to all-time highs earlier this summer amid tight supplies and growing demand from ethanol producers. During August, corn prices rose 9.2 percent from July and rose 94 percent from the same month in 2010, according to the PPI report.
Slaughter-ready cattle and hog prices last month were up 22 percent and 28 percent, respectively, from year-earlier levels. Among other crude food materials, fluid milk was up nearly 32 percent in August, soybeans were up 26 percent and wheat was up 23 percent.
Corn remains historically high as this year’s harvest picks up, after a July heat wave damaged the crop. In trading Sept. 14, Chicago corn futures for December delivery rose 1 ¼ cents to $7.24 ¼.
October live cattle futures rose 1.4 cents to $1.21 a pound, while October lean hog futures rose 1.3 cents to 88.45 cents a pound.
The PPI crude goods reading, a broader measure that includes coal, oil, iron ore and other materials, rose 0.2 percent in August from July and was up 18 percent from a year earlier.
A gauge of wholesale prices, PPI reports track a broad range of crude, intermediate and finished goods, and rising numbers typically are followed by gains in consumer prices in following months.
The Bureau of Labor Statistics, a part of the U.S. Labor Department, is scheduled to release its August Consumer Price Index report on Sept. 15.