USDA forecasts that the consumer price index for food will increase just 0.5 percent to 1 percent this year, the lowest rate since 1992. In last month’s forecast, USDA pegged the food price increase at 1.5 percent to 2 percent.
The lower food price inflation is attributed to a still moribund global economy. Because of the weak U.S. economy, higher commodity prices haven’t translated to higher food prices for consumers.
“The economy is weaker than what I thought in July,” said Ephraim Leibtag, the USDA economist responsible for the forecast. “Food companies are taking a wait-and-see attitude about passing along commodity costs.”