It would be the second year in a row of high food-price inflation, with an additional year or two of large increases expected. Until 2007, food prices tended to rise more slowly than the overall U.S. inflation rate.
"This year, we expect food prices to increase about 5%," said Joe Glauber, USDA's chief economist. At the start of the year, USDA foresaw a 3.5% rise.
Prices of cereals and bakery products are forecast to zoom by 8% this year, up two percentage points from USDA's initial forecast.
"That's what happens when wheat prices double in six months," said Ephraim Leibtag, a USDA economist who tracks food prices.
Sharp increases are forecast for eggs, fats and oils this year. Cereals and bakery goods account for a larger share of food spending than do eggs and fats and oils.
Americans spend more than $1 trillion a year on groceries, snacks, carry-out food and meals at restaurants. Farmers receive 20 cents of the food dollar, which dilutes the effect of record-high crop prices. The rest goes to processing, labor, transportation and distribution.
Meat, poultry and fish prices, forecast for minor increases this year, will be a leading reason for higher food prices in 2009, said Leibtag, because high feed prices will limit meat production.
From the May 27, 2008, Prepared Foods e-Flash