Food prices aren’t expected to rise much this year. And given
the low U.S.
inflation rate, that shouldn’t surprise anyone, says a University
of Georgia economist.

“Food prices are much more tied to the general economy
than to farm prices,”
said Bill
Thomas, an Extension
Service agricultural economist with the UGA College of Agricultural and
Environmental Sciences.

Price
expectations

Overall food prices are expected to rise only 2 percent
to 2.5 percent during 1999.
Thomas said the modest rise has little to do with the
prices farmers get for their crops.

“Mostly, that’s due to factors associated with the
general economy,” he said.
“Most of the price is for packaging, labor, transportation
and things like
that.”

Pork, for
example

PORK RETAIL PRICES dropped just 4.7 percent in 1998, in spite of a disasterous price year for hog farmers. UGA economist Bill Thomas expects retail prices to continue falling, but only by 2 percent to 4 percent, in 1999.

A good example, he said, is the price of pork. Farmers
had a disastrous year in 1998.
An oversupply of hogs sent prices plummeting from around
45 cents per pound to a low near
5 cents before climbing back to 25 to 30 cents.

Despite the huge drop in farm prices, though, pork
prices dropped just 4.7 percent,
according to the Consumer Price Index through 1998.

Pork prices are expected to continue edging downward in
1999, Thomas said, but only by
2 percent to 4 percent. “You don’t see that much of a
drop,” he said,
“because a lot more goes into the price than just the meat
itself.”

Food prices not all food
cost

Thomas said that’s true of food prices in general. “We
pay a big part of our food
prices for the convenience of them,” he said. As shoppers
and diners opt for more
convenience, prices have less and less to do with the farm
commodity itself.

As you might expect, then, the price of food away from
home is expected to rise more
(2.5-3 percent to 1.5-2 percent) than at-home foods. Foods
eaten at home more closely
reflect farm prices.

Weather affected fresh produce
prices

The biggest price increase in 1999, Thomas said, is
expected in fresh fruits at 5
percent to 7 percent. Fresh vegetables, on the other hand,
are expected to drop 1 percent
to 3 percent. Both price changes, he said, are due to the
weather’s effect on supplies.

“1998 was a terrible year,” he said. “Resulting losses
in fresh
vegetable supplies drove prices up. Anticipating a more
normal year expected in 1999, the
forecast is for those prices to come back down. With fresh
fruit, though, you have more
carry-over effect from last year’s bad weather. With
supplies expected to remain somewhat
low, prices should increase again.”