Rain infested crops, rising prices of animal feed and soaring fuel prices are forcing the US consumers to spend more on food and also reducing food sellers’ profit.

According to the Agriculture Department, the US consumers should get ready to face the highest rise in food prices in around 20 years (since 1988), as reported by USA Today.

It is believed that food prices will soar between 5% and 6% this year, the highest annual increase from 1990. The prices are expected to gain from 4% to 5% next year (2009). Vegetable and fruit prices, which have a share of over 8% in food spending, are also predicted to rise 5.5%, up from July 2008 prediction of 5%. Besides, prices for bakery products and cereals will rise by 9.5% while eggs and fats & oils will mount to 14% and 13.5% respectively this year.

This high food prices forecast is mainly based on smaller crops owing to wet spring. Damages to food crops from rain has been enormous that lead to the shortage of food grains and high demand in the country. In face of low production, the prices of food gains have climbed up but prices of eggs and meat products have surged because of costly animal feed. This has forced poultry owners to raise their prices to offset loss.

Apart from this, the food prices are further fueled by soaring energy cost. As fuel prices soar to new heights, they raised the overall food prices because fuel is used in processing, packaging and transportation. Moreover, the raw ingredients of some food products such as cereal, corn and cheese have significantly gone up, raising the prices of food items.

The increment in the US food prices is not temporary but it will remain up next year as the fuel and food ingredients prices are unlikely to come down in coming months. This shows a grim picture for Americans as they have to buy expensive food.

A Research Analyst at RNCOS opined, “Rising food prices are not only affecting consumer spending power but also affecting food sellers by eating into their profits. This has also imbalanced the household budgets and reduced the profit margins of sellers. Moreover, it will affect other industries as people are bound to cut down their spending on non-essential items to buy expensive food.”

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