the visible hand

it is the theory which decides what can be observed – einstein

Food price forecast raised again…

Posted by ecoshift on May 19, 2008

Government Again Raises Forecast for Food Prices – WSJ.com
By SCOTT KILMAN
May 20, 2008; Page A3

The government raised its one-month-old forecast of how much food prices will rise in 2008 by half a percentage point to a range of 4.5% to 5.5%.

The forecast released Monday by the Agriculture Department is the third consecutive month the agency has raised its food-inflation forecast by half a percentage point. With the latest increase, the food-inflation forecast is approaching levels not seen in the U.S. since 1990, when food prices climbed 5.8%. Food prices rose 4% last year.

For consumers, the forecast signals that the typical household will probably pay about $350 more for the same basket of goods they bought last year. The federal government also faces higher budget costs for nutrition programs that feed millions of Americans.

The new forecast will play into a political battle over subsidies for the U.S. ethanol industry, which is devouring corn at a record pace to make an alternative fuel to high-priced gasoline.

Food manufacturers and livestock producers are angry that their costs of buying corn have doubled over the past two years. Spurred in part by federal mandates championed by President Bush, the ethanol industry’s appetite for the nation’s largest crop likewise doubled during the same period. USDA economists expect the ethanol industry to consume one-third of the 12.1 billion bushels of corn that U.S. farmers are expected to produce this year, keeping corn prices at record levels.

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