Food prices continue to be very stable. The latest government report shows that from June to July overall food prices actually went down 0.1%. USDA Food Price Economist Ephriam Leibtag says that compared to a year ago food is costing 0.9% overall, with slightly lower inflation for grocery stores at 0.7% and slightly higher for restaurants at 1.1%. However Leibtag says this low inflation rate has to end sometime.
"With some of the commodity price increases, wheat for example, some of the meat products rising we expect to see retail prices in all those categories accelerate a little bit," Leibtag said. "Even if we get some significant price increases in the upcoming months, overall for the year it will still be a relatively low inflation number, but we do see some potential for a little bit higher than normal inflation in 2011."
Leibtag had been projecting food price increases for this year at 2%, but with things still relatively weak, he says that could actually be a little bit high for 2010 even if a little more inflation is seen. The new forecast will be released on Aug. 25.