The United States Department of Agriculture is making some adjustments to its Food Price Inflation forecasts.
Two key areas in the forecasts have been adjusted based off of findings late last week by the USDA.
Dairy product inflation originally started the year at an inflation rate of 3.5% to 4.5%, but according to USDA Economist Ricky Volpe, the drought last year may have already run its course on inflation impacts.
“It’s increasingly looking like we have already seen the bulk of the impact of the drought on fluid milk prices”, said Volpe. “There was a big surge in these prices at the tail end of 2012 and at the beginning of 2013, but that seems to be subsiding.”
The new inflation rates are down to 2.5% to 3.5%, which is considered more in the realm of normal.
Another area that saw improvement was the cereals and bakery products category.
Over 9% of consumer grocery shopping consists of cereals and baked goods.
Volpe says wheat prices are behind the slight inflation decrease.
“The outlook for wheat prices has moderated a little bit, and we are not looking at a big jump in wheat prices, in fact we may be actually looking at prices decreasing”, said Volpe.
Originally set at an inflation rate of 2.5% to 3.5%; cereals and baked goods saw a drop down to 2% to 3% inflation.
Volpe says that should remain the case for the remainder of the year, barring any kind of severe drought conditions resurfacing in the Midwest.