Food Inflation May Slow Because of Falling Commodity Prices

Downward trend of farm products could lessen increase in food prices.

Published on: Aug 14, 2008

Over the past several weeks prices for farm commodities have trended lower although they remain fairly high. According to USDA economist Ephriam Leibtag, that trend when coupled with the August crop report that showed less damage from floods and estimates for large crops may help calm food retail inflation.

"We've had this accelerated inflation, we've had inflation rising above 5% for the last few months and it could have been a case that was going to last quite a bit longer into 2009. If these commodity prices continue to fall then we may see less of an impact going forward," Leibtag says. "I think that for the next few months we're still going to see food price inflation at the retail level at an accelerated rate, but it could be as we head into 2009 that we won't see as much inflation as before; so not that food prices will come back down, but that we'll stop seeing these increases that everyone has been experiencing over the last six months."

However Leibtag says that could quickly change if bad weather or early freezes damage this fall's crops.