In January, inflation rates for major food groups were well above the national average. Since then, the rates for products such as fruits, vegetables and meat, have fallen steadily to near zero percent.
California agriculture controls much of Indiana’s winter food prices; and with El Nino expecting to bring much needed rain and snow to the area, inflation could drop even more.
Purdue agriculture economist Chris Hurt was shocked inflation rates fell so much due to the continued drought in California. “I think right now the prospects for food production in California looks positive, and that should help keep our costs of those food product very moderate going forward the next six months to a year,” said Hurt. “What we’ve seen so far on fruits and vegetables is basically unchanged, a surprise really. At the start of the year, we were anticipating the drought damage in California to raise fruit and vegetable prices.”
Fruits and vegetables were expected to take a big hit, but has dropped from 2.3 percent to near zero percent.
“What we’ve seen so far this year is very moderate food inflation. Total cost of food is only up around 1.6 percent,” explained Hurt. “As consumers, we are seeing growth in income; and on average will be more than the cost of inflation of food.”
For farmers, this is tough, as prices are below price of production. But for consumers, it’s a relief on the wallet.
If California receives the anticipated rain and snow, Hurt said consumers should expect these prices to last through the start of 2016.
