President Bush released his economic stimulus package Friday in Washington D.C. talking about the challenging times ahead and the country's concern about their economic future. A major challenge that consumers face is inflation, including higher food prices.
USDA economist Ephriam Leibtag says we already have high food prices; the question is how much more will we see as we move forward. He says last year food prices increased 4% over 2006 and right now food prices are 5% higher than a year ago. However; Leibtag is keeping his 2008 food price inflation forecast at 3 to 4% despite sharply rising prices for farm commodities.
"Why I kept it the same is because on the one hand you have these things going on in the commodity markets which seem to be raising prices," Leibtag says. "On the other hand we've seen some weakening at the retail level and the overall economy is a big story right now. So it was almost a canceling out where I didn't feel like pushing one way or the other on the forecast."
Because of higher prices for corn, soybeans and wheat, bakery products and fats and oils are leading the way in the higher food prices for 2008. While Leibtag sees pressure on food prices at the retail level for the first quarter of the year, he expects to see some moderation in several of the sub categories during the middle of 2008.