Retail bacon prices climbed to a record for the fifth consecutive month and prices for steaks, milk and butter also increased, extending a year-long food inflation trend that’s expected to continue into 2011.
Bacon averaged $4.77 a pound at retail during October, up from $4.57 in September, the U.S. Bureau of Labor Statistics said in its monthly Consumer Price Index report Wednesday. That was up 33 percent from $3.60 a year earlier and the highest monthly average, unadjusted for inflation, in records going back to 1980.
A broader consumer price index tracking beef, pork, poultry, fish and eggs rose 0.6 percent last month, the ninth monthly increase in the past 10, according to the bureau. The index is up 5.8 percent from October 2009.
Beef and pork prices are rising because U.S. cattle and hog herds have shrunk in recent years, forcing meatpackers to bid more aggressively for smaller supplies of slaughter-ready animals.
Analysts see little prospect of expansion in U.S. cattle and hog herds in the near future, meaning consumers probably will continue paying higher prices at the supermarket meat case. Additionally, with unemployment near a 27-year high more Americans are eating at home rather than dining out, increasing demand for meat at the retail level, analyst Mike Zuzolo said.
“Until joblessness reverses, I see this trend of spreading that dollar to the thinnest continuing,” said Zuzolo, who is president of Global Commodity Analytics & Consulting LLC. “I see 2011 as a year where the consumer will feel the effects of higher food prices.”
Retail pork prices are expected to rise 3 percent to 4 percent in 2011 after rising 4.5 percent to 5.5 percent this year, according to a USDA forecast. Beef is expected to increase 2.5 percent to 3.5 percent next year following a similar rise this year.
Hog prices have fallen from last summer’s highs, which may eventually curb the run-up in retail pork, said Ron Plain, an economist at the University of Missouri. Retail prices tend to be “sticky,” lagging wholesale and farm values, noted Plain.
Among other meat cuts, bone-in pork chops averaged $3.59 a pound in October, up 1.4 percent from September and up 10 percent from October 2009. Choice-grade sirloin steak averaged $6 a pound, up 3.2 percent from September and up 7.9 percent from a year ago.
Bacon and many other products are still relatively cheap compared with the high-inflation period of the early 1980s. During September 1982, retail bacon averaged $5.34 in 2010 dollars, according to CPI calculations.
Food prices overall have changed little in recent months and retail inflation generally remains subdued, today’s data showed. For food consumed at home, consumer prices were unchanged in October from September and up 1.4 percent from a year earlier.
Overall, the Consumer Price Index increased 0.2 percent in October on a seasonally-adjusted basis. Excluding food and energy, the CPI has risen 0.6 percent over the past year, the smallest 12-month increase in records going back to 1957, the Bureau of Labor Statistics said.