Food prices on rise due to oil climb

Food prices on rise due to oil climb Retail food prices will rise slightly for the rest of this year due to the late-summer surge in crude oil prices, the U.S. Agriculture Department (USDA) said Friday. USDA said food prices might rise as much as 3.5 percent from last year, when they climbed 3.4 percent — a sharp acceleration from modest increases that averaged 2.5 percent in the preceding decade. Fresh fruit and vegetable prices were up more than 6 percent for this year, the largest increases among food categories. Meat prices were flat and dairy was down. Cereal and bakery goods were up 1.4 percent. “Higher energy prices will soon work their way into the food supply system and cause food prices at the retail level to increase slightly for the remainder of the year,” wrote USDA food-price analyst Ephraim Leibtag. Although USDA still expects a year-on-year increase in the range of 2.5 to 3.5 percent, “We expect that prices will be on the higher end of our ranges now in light of recent events,” Leibtag said. Hurricane Rita, approaching the Texas coast, was not considered as part of the new forecast. It will be taken into account for next month’s forecast. USDA has forecast a moderate 2 to 3 percent rise in food prices in 2006, based on stable red meat and dairy prices, slower growth in fruit and vegetables prices, and moderate increases in poultry, seafood and bakery-goods prices. www.reuters.com