Drought has gripped the U.S. and other food-producing regions in a vice, causing crop failure and more expenses for farmers. Now, federal forecasters have estimated that you may soon feel the costs at your grocery stores. Retail food prices are estimated to rise by as much as 3.5 percent this year, which is the biggest annual increase in three years, according to The Wall Street Journal.
The drought is causing poor crop production. This, in turn, is causing a reduction in both livestock and dairy, which means higher prices for meats and dairy. Currently, there are ongoing drought conditions in the Midwest and Great Plains in the U.S., according to The Gothamist. In California, which is the biggest U.S. producer of agricultural products, about 95 percent of the state is suffering from drought conditions, according to the U.S. Drought Monitor. This, in turn, has prompted farmers to cull their herds rather than pay the prices to feed the animals.
Already, we're seeing increases in prices. The food price index rose by .4 percent in February, according to CBS News. This marked its biggest spike since September 2011. The only food groups where prices declined were in non-alcoholic beverages, cereals and bakery products.
In fact, it's estimated that consumers could pay as much as $1 more per gallon of milk at the grocery store in order to compensate for low supplies and high demand, according to The Gothamist. In addition, inflation of corn and soybean products are also causing issues for farmers.
"To best honest, until a month ago, our feeling and thinking was that most markets were well-supplied," said John Baffes, senior economist at the World Bank, in an interview with The Wall Street Journal. "Now the question is: Are those adverse weather conditions going to get worse? If they do, then indeed, we may see more food price increases."
