Beef retail price increase less subtle than competitors

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Consumer meat prices increased by between one and six percent compared to a year earlier in September, but beef prices remain steady compared to increases for pork and poultry.

Beef prices according to the USDA Economic Research Service’s Consumer Price Index increased by 1.7 percent in September compared to the same month in 2012. The increase is lower than the 3.1 percent average increase for all meats, poultry and fish. Gains in beef prices are also lower than the increase in pork, 3.2 percent, and poultry, 5.9 percent.

Beef prices experienced more drastic increases in 2011 and 2012 when prices were up 10.2 percent and 6.4 percent respectively. Prices are expected to advance as supplies get more limited, with the ERS forecasting increases of 2 percent to 3 percent in 2013 and up to between 2.5 and 3.5 percent next year.

Pork prices are forecasted to improve between .5 and 1.5 percent in 2013 and move another 2 percent to 3 percent higher next year. The highest gains are anticipated for poultry, which the CPI shows to increase 3.5 percent to 4.5 percent this year and an additional 3 percent to 4 percent in 2014.

The increase in beef prices adds to prices already elevated from years of consecutive drought conditions beginning in 2011, resulting in the smallest herd size in 61 years. Next month’s report is expected to show further increases in beef prices, with wholesale beef prices passing $200 for the first time since June.

Rich Nelson, chief strategist for Allendale Inc in McHenry, Illinois, told Reuters the increase is partly attributed to the rise in beef prices to grocers and restaurants stocking up after they curbed purchases during the 16-day government shutdown in October, when they feared consumer spending would drop.

"During the shutdown a lot of end users were not buying beef. They were trying to hold back a little bit," said Nelson. "This is all coming together at the start of a big decline in supply, which will last through early second quarter 2014."

Read the Consumer Price Index.

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