Barring another big U.S. drought or a major disruption of international markets by sudden global losses in crop or energy production, it looks like another year of moderate food price increases for American consumers.
The Agriculture Department is forecasing that retail food prices may rise 3 percent to 5 percent in 1989, about in line with the upward creep of recent years. That estimate averages 12 monthly projections.But food ecomomist Ralph Parlett says the USDA forecast could be revised later this month following a review of the price situation for the first three months of this year.
"What we're looking at, primarily, is that we've gotten so much stronger first-quarter prices, particularly in fruits and vegetables, than we had anticipated," Parlett said. "We sort of missed . . . with the cold weather in California, and some in Florida, too."
According to the department's Economic Research Service, if the 1989 forecast is revised upward by a full percentage point - to a range of 4 percent to 6 percent - and if it proves to be accurate, the gains in food prices would be the highest in eight years.
In 1988, the average of monthly food prices rose an average of 4.1 percent, the same as in 1987. The annual increases previously included: 8.6 percent in 1980, 7.9 percent in 1981, 4 percent in 1982, 2.1 percent in 1983, 3.8 percent in 1984, 2.3 percent in 1985 and 3.2 percent in 1986.
Denis Dunham, another USDA analyst, notes in a new review that food costs "rose at a much higher rate in the second half of 1988 than in the first half due to the severe drought and other market factors."
By December, he said, prices were 5.2 percent higher than in December 1987, the biggest jump since 1980.
The average 4.1 percent increase in last year's food prices was exactly in step with the broader rise in living costs as measured by the Labor Department's Bureau of Labor Statistics. In 1987, when food prices also rose 4.1 percent, the overall index gained just 3.6 percent.
Economists look at two major components: food sold in grocery stores for use at home, and meals and snacks consumed away from home. The two rose at almost identical average rates over the entire year.
But measured from December to December, food prices in grocery stores went up much more rapidly, partly because last summer's drought boosted prices for fresh vegetables, cereals and bakery products, eggs, and fats and oils. By December, the food-at-home index was up 5.6 percent from a year earlier.
Food served in restaurants, which is affected less by the costs of raw products, increased only 4.4 percent from December to December.
Dunham said the cost of the traditional market basket of food items used to compare retail, marketing and farm values from year to year rose 3.5 percent in 1988.