The US Department of Agriculture (USDA) said that food prices in the country are expected to surge between 4% and 5% in 2008, as reported by Guardian.co.uk. The department further revealed that the country has witnessed the highest annual increment of 5% in food prices since 1990. The prices of corn in June 2008 flared up by 143% to $8.26 per bushel, an increase of more than double the prices recorded in mid 2007. The price of food items like beef, chicken and pork would be prime cause for higher prices in the US in 2009. As for 2008, the highest price rise is forecast for eggs, cereals and bakery products, fats and oils by 14%, 9.5% and 12% respectively.

The key reason for rise in prices of food items is depreciation in the value of US dollar. The weak dollar reduces the prices of food items like grain and other agricultural products for the foreign countries, which, in turn, increases the demand in domestic market and prices go up. Also, natural calamities such as floods have disrupted the supply.

Apart from this, other factors that have pushed the prices up include high gasoline and oil prices that have increased the transportation as well as production cost, translating into a rise in food prices. Moreover, surging global consumption has contributed by escalating food costs.

According to the industry experts, food prices will remain high until oil decreases in price and the dollar bounces back, as they together are fuelling the prices. However, Wally Tyner, an Economist at Purdue University, said that food prices will remain high in next two years as rising demand will encourage farmers to increase production to take advantage of the situation.

The food prices in the US are rising due to various reasons, such as high oil prices and low supply. The burgeoning pressure of price rise has affected the overall food industry as retailers have lost their profits. To tackle the problem, the government should come forward with new programs like subsidised school lunches that protect the vulnerable population from higher prices, and at the same time ensure benefits to producers as they will keep the production up.

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