Iowans will likely be spending more money at grocery stores this year, but U.S.D.A. economist Ricky Volpe says the food price increase should not be dramatic. “We generally expect grocery store prices to increase maybe around 2.7 or 2.8 percent every year and the current outlook for 2014 really catches that right on the button,” Volpe says.
One area where shoppers will keep seeing high prices will be in the beef aisle. Volpe says that’s mostly because cattle herds have gotten smaller since 2011. “The number of cattle in the U.S. is comparable to where we were in the 1950s and of course we have a much larger population and we’re exporting a lot more, so consumers should not expect a huge price increase, but certainly for these very high prices to stay and even inch up a little bit more,” Volpe says.
A wild card influence on food prices in 2014 will be if wholesalers and retailers decide to widen what have been narrow profit margins in recent years. “There’s nobody in the food supply chain who can permanently absorb losses or reductions in their margins so that should pick up at some point in 2014 and should translate into a quickening of the pace of food price inflation over at least what we saw in 2013.”
