Retail beef prices hit record for second month in a row, pork also up

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U.S. supermarket beef prices in February hit record highs for the second month in a row and pork prices also increased, reflecting tight animal inventories and expanding exports

Choice-grade beef at retail averaged $4.64 a pound last month, up 10 percent from February 2010 and the highest monthly price on record, unadjusted for inflation, according to average price data released March 17 by the U.S. Department of Agriculture.

The prices reflect average nationwide retail prices for steaks, burgers and other beef cuts.

Prices for beef, pork, milk and other farm commodities climbed over the past year as the economy improved and top U.S. export customers such as Canada and South Korea purchased more. Increasing demand comes with U.S. livestock inventories near historic lows, after the 2008-09 recession forced beef and pork producers to trim herds.

Rising meat prices are playing a big role in accelerating food inflation, and analysts say beef and pork will likely get even more expensive.

“We have seen higher rates of growth in consumer food prices during the past few months, and we expect these to continue for some time,” said Daniel Madison, a researcher at the Food and Agricultural Policy Research Institute at the University of Missouri.

“Basic commodity prices have experienced large jumps in the past year, and many of these increases are just now beginning to show up in retail food prices,” Madison said in a March 17 e-mail. “It takes some time, especially in a difficult economy, for retailers to pass along their higher purchasing costs to consumers.”

Rising food prices have already been taking a bigger bite out of consumers’ pocketbooks. In February, average retail prices for food consumed at home rose 0.8 percent from January, the largest month-over-month increase since July 2008, according to the Labor Department’s Consumer Price Index report March 17.

Over the past year, prices for food at home rose 2.8 percent, the largest increase in almost two years. Compared to February 2010, average retail meat prices jumped 9.2 percent last month, the biggest year-over-year gain since August 2004.

Pork retail prices averaged $3.28 a pound last month, up 1.2 percent from January and up 12 percent from February 2010, according to the USDA. The pork average hit $3.36 in October, a record not adjusted for inflation.

Higher energy costs are also contributing to rising food prices, Madison said. As oil trades around $100 a barrel, it is likely commodity prices will remain elevated for at least a few more months, he said.

The farm value of agricultural products accounts for only about 15 percent to 20 percent of the prices for finished consumer food products in the U.S., with energy, labor and packaging also factoring in, Madison said.

“Growth in the CPI for food will continue to rise for much of this year, if not into 2012,” Madison said.

Most U.S. households spend a relatively small share of their disposable income on food, Madison said. Still, “these higher costs will be very difficult for households already struggling due to the current high unemployment rate and other negative economic factors affecting the U.S.”

Among specific cuts, bacon averaged $4.37 at retail during February, up from $4.25 in January and up 20 percent from $3.64 a year ago. Bacon hit a record $4.77 in October. Choice-grade, boneless sirloin steak averaged $6.25 a pound last month, down 2 cents from January but still up 83 cents, or 15 percent, from February 2010.

Bacon and many other products are still relatively cheap compared with high-inflation periods of the 1970s and early 1980s. During September 1982, retail bacon averaged $5.41 in 2011 dollars, according to CPI calculations.

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