Retail prices for meat and eggs rose during November, the 10th monthly gain in the past 11, as smaller cattle and hog herds contributed to food inflation that’s outpacing increases in other goods and services.
The Consumer Price Index for beef, fish, pork, poultry and eggs gained 0.5 percent last month compared to November 2009, the U.S. Bureau of Labor Statistics said in a report today. Over the past 12 months, the meat and eggs index is up 5.8 percent, the biggest increase for any food category and the largest for any CPI category outside of fuel.
Retail pork prices reached record highs earlier this year and beef is also up, as smaller herds forced meat processors to bid more aggressively for slaughter-ready animals. Livestock feeders cut herds starting about two years ago after the recession and a spike in corn prices above $7 a bushel generated deep losses. Dairy prices have also climbed much of this year.
Higher farm commodity costs “have worked their way to retail over the past few months,” Ephraim Leibtag, an economist with the U.S. Department of Agriculture, said in an e-mail today. “That, along with stronger global demand for meat, has pushed prices upward.”
Stronger beef and pork exports are also a factor, Leibtag said. “We are forecasting that meat (prices) will continue to rise as long as world economies continue to improve and commodity prices remain at or above current levels,” he said.
Increasingly expensive beef and pork is a concern for the industry’s producers because chicken production is expanding and high unemployment may push cash-strapped consumers toward cheaper meats, analysts say. Poultry industry executives have said they see opportunities to exploit the price differences and grab a bigger share at the supermarket meat case.
“With higher-priced beef and pork at retail, we are probably going to get more ad activity,” Joe Sanderson, Jr., chief executive officer with Sanderson Farms, Inc., said in a conference call yesterday. Sanderson Farms is the fourth-largest U.S. poultry processor.
“I do like competing against high-priced beef and pork,” Sanderson said. “I believe we will get more features in grocery stores.”
Little, if any, expansion is expected in U.S. cattle and hog herds in the near future, meaning consumers probably will continue paying higher prices for meat, economists say.
Retail pork prices are expected to rise 3 percent to 4 percent in 2011 after rising 5 percent to 6 percent this year, according to a USDA forecast released Nov. 25. Beef is expected to increase 2.5 percent to 3.5 percent next year following a similar rise this year.
Meat-buying consumers did receive some relief last month as prices for many pork cuts declined, reflecting the hog market’s slide from summer highs. At the wholesale level, pork prices are down 18 percent from a record 96.74 cents a pound in August.
The average U.S. retail price for bacon in November fell to $4.70 a pound from an October average of $4.77, which was the fifth-consecutive monthly record, unadjusted for inflation. Retail bacon is still up 34 percent from $3.50 a year ago. Boneless pork chops declined to an average of $3.83 a pound in November from $3.89 in October.
Among beef cuts, choice-grade, boneless sirloin steak averaged $6.15 a pound last month, up from $6 in October and up from $5.75 during November 2009. Bone-in chicken breasts averaged $2.42 a pound, up 3 cents from a month earlier and up 15 cents from a year earlier.
Prices for milk, butter and other dairy products have also increased amid stronger exports and tighter global butter supplies. Fresh, whole milk averaged $3.33 a gallon nationwide last month, up 1 cent from October and up 30 cents, or 10 percent, from November 2009, according to the Bureau of Labor Statistics.
Food prices overall have climbed only modestly in recent months and retail inflation generally remains subdued, today’s data showed. For food consumed at home, consumer prices were up 0.3 percent in November compared with October and up 1.7 percent from a year earlier.
Overall, the Consumer Price Index increased 0.1 percent in November from October on a seasonally-adjusted basis. Excluding food and energy, the CPI has risen 0.8 percent over the past year, the Bureau of Labor Statistics said.