U.S. consumers will pay less for beef next year than earlier forecast as the worst drought since 1956 works its way through the food chain, the Department of Agriculture said.
Beef prices next year may increase 3 percent to 4 percent, a full percentage point less than estimated in October, the agency said Friday in a monthly report. Pork will rise the same amount, an increase of one-half of a percentage point from the earlier forecast. Food prices across all categories will increase 3 percent to 4 percent next year, unchanged from last month's estimate.
"The severe drought in the Midwest is affecting prices for corn and soybeans as well as other field crops which should, in turn, drive up retail food prices," USDA economist Richard Volpe wrote in a note accompanying the report. "However, the transmission of commodity price changes into retail prices typically takes several months to occur, and most of the impact of the drought is expected to be realized in 2013."
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