Supermarket dairy prices last month posted the largest increase in over three years and beef and pork inflation also accelerated as high feed costs and tight animal supplies forced consumers to pay more for steaks, chops, milk and other products.
Nationwide, average retail prices for dairy and related products rose 9.1 percent in August compared with the same month in 2010, according to the U.S. Bureau of Labor Statistics’ monthly Consumer Price Index released Sept. 15. That compares with a rise of 7.9 percent in July and is the biggest year-over-year increase since June 2008.
Beef and veal prices rose 10.4 percent from August 2010, the fifth month so far this year the category surged more than 10 percent, according to CPI data. Pork prices were up 7.5 percent.
Increasingly expensive beef and pork reflects smaller herds and robust export demand that drove record prices for slaughter-ready cattle and pigs earlier this year. Animal prices are expected to remain historically high into 2012, partly because corn above $7 a bushel sent livestock producers’ feed costs up sharply, a possible precursor for herd contraction.
As of the beginning of July, the total U.S. cattle inventory was at an all-time low, according to the Agriculture Department.
The outlook for even higher meat prices is troubling for the livestock industry, which has already seen consumers cut back on meat purchases.
During the four weeks ended July 24, U.S. supermarket beef sales totaled 326.6 million pounds, down 9 percent compared to the same period a year earlier, according to FreshLook Marketing Group. Higher prices offset weaker volume, with sales in dollar terms up 1.8 percent, to $1.37 billion, for that period. The sales numbers do not include Wal-Mart Stores or warehouse chains such as Costco Wholesale Corp.
Meat and dairy prices also increased compared with July. Beef and pork rose 0.4 percent and 0.8 percent, respectively, compared with July levels. Dairy prices rose 0.9 percent, the 12th consecutive monthly gain.
Among specific cuts, choice-grade, boneless sirloin steak averaged $6.30 a pound last month, up from $6.04 in July and up from $5.67 in August 2010. Boneless pork chops averaged $4.13 a pound, up from $4.01 in July and up from $3.93 a year earlier. Bacon averaged $4.77 a pound, up 1 cent from July and up 42 cents from a year earlier.
Fresh, whole milk at retail averaged $3.71 a gallon nationwide, up 12 percent from $3.30 during August 2010 and the highest monthly price, not adjusted for inflation, since $3.73 in November 2008.
Fresh fruit and vegetable prices have also risen, contributing to food inflation that’s on track for the third- or fourth-biggest annual increase over the past 20 years, according to CPI data. Retail meat prices are expected to rise 6 percent to 7 percent this year, the largest annual increase since an 8.4 percent jump in 2004, according to USDA forecasts.
A broader price index reflecting food consumed at home rose 0.6 percent during August from July. Compared to August 2010, prices for food at home rose 6 percent, the largest year-over-year increase since a 6.7 percent jump in December 2008.