High food inflation consequence of drought

Food inflation in most categories significantly outpaced the overall Consumer Price Index of 2.2 percent reported in November, the US Department of Agriculture said in its Nov. 23 Economic Research Service Food Price Outlook. It was not clear how much of that inflation – ranging from 4.5 percent to 6 percent for most meats, poultry, fats and oils – was an after-effect of the 2012 drought. But Bill Lapp, president of Advanced Economic Solutions in Omaha, said he believes the 2012 corn crop sustained a $25 billion toll from the drought – about 3 percent to 4 percent of the entire food economy – that must ultimately be paid by producers and retailers and is likely to affect food prices well into the 2013 crop year.  Read More