The drought that affected crops in the Midwest this past summer is making its presence felt at the grocery store. It had substantial and devastating impacts on the major field crops of the American Midwest. The most important field crop there is field corn. Now, people don’t eat field corn directly, but it’s processed into animal feed and that’s a major input to the U.S. food supply chain so we’re seeing input costs rise for all the meat products and then all of these animal based products that consumers buy regularly. We’re looking at inflation on the order of about three to four percent for beef and veal, pork, poultry, eggs and even a little bit higher for dairy. For dairy we’re looking at probably three and a half to four and a half percent. In the second half of the year Volpe says consumers will see the effects of drought on the price of processed food. These all rely on commodities. They rely on field corn and soybeans and so on and those input costs are going up. It’s just that due to the more stages that are involved in bringing in the supermarkets and the contracts that govern those commodity prices for those foods, consumers won’t see that until later in the year and even probably to some small extent in the early part of 2014. And as for the rest of the grocery store. So for most food categories that are not impacted directly by these higher commodity prices, especially field corn, we’re looking at pretty normal food price inflation. And normal food price inflation is two point eight percent.

Drought Affecting Food Prices In 2013|