A dramatic drop in the price of gas won't make your grocery bill any easier to swallow because officials are forecasting a hike in food prices in nearly every category, due to brutal drought, fluctuations in demand and a virus afflicting farm animals.
"For 2015, we're predicting the price of food will increase 2 to 3 percent," said Annemarie Kuhns, agricultural economist at the U.S. Department of Agriculture's Economic Research Service, which takes into account several factors, including the Consumer Price Index, the price of energy and grocery store wages.
The USDA is predicting hikes of 4.5 to 5.5 percent for beef, veal and pork — by far the highest jump expected.
Poultry, seafood, dairy, and fruits and vegetables are also expected to climb by 2.5 to 3.5 percent, with sugar and sweets seeing a 2.5-percent hike, the USDA fears.
Eggs, cereals and bakery products are all expected to increase less than 1.5 percent.
Beef and veal prices will likely continue to reflect a cattle inventory that is at a historic low due to drought in Texas and Oklahoma, Kuhns said, while porcine epidemic diarrhea virus, which affects pigs' litter sizes and increases piglet mortality, is expected to push up the price of pork.
Demand for cheese and other dairy products also remains high, supporting increased prices, she said.
The hikes are expected even as major drops in the prices of gas and diesel needed to transport food are saving grocery stores big money.
"For the food supply chain, if the price of fuel and energy in general is going down, it's a windfall," said Andrew Wolf, senior equity research analyst at BB&T Capital Markets' Food and Agribusiness Group in Boston. "They won't lower their prices, but it'll mean less inflation in prices because one of their big costs has just dropped."
Nationally, the average price of regular gasoline on Friday was $2.60 per gallon, down 11.7 cents from a week earlier and 65.2 cents from last year, while the average price of diesel was $3.44, down 8 cents and 41 cents, respectively.
But whatever amount consumers save through lower gas prices could be cancelled out by the across-the-board food price increases the USDA is predicting.
"If the price of food increases 2 to 3 percent, that would have some negative impact on household budgets because it's higher than the rate of inflation and wage rates," said Alan Clayton-Matthews, associate professor of economics and public policy at Northeastern University.
The impact will be particularly hard felt by people already struggling to make ends meet, said John Drew, president and CEO of Action for Boston Community Development.
"The vast majority of Americans will be affected because most people's wages aren't going up," Drew said. "But it will affect the poor and unemployed or underemployed even more because a lot of them still are just trying to hold onto their housing. If the price of food goes up, they're going to have to decide: Do I pay the rent or mortgage, or do I feed my family?"
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