CLARKONOMICS: You’ve heard about the drought-induced failure of the corn crop. But what will it mean to your food budget when you go shopping in the supermarket?
The surprising answer is that it will mean less than it might appear it would at first glance. Here are the latest projections from the USDA:
- Packaged goods will see an increase in price of 1% or 1.5%.
- Beef will see a 4% increase this year and as much as 5% next year.
- Pork will be up 3% this year and 3% next year.
- Dairy will be up 3% this year and 4% next year.
As you can see, in the overall scheme of things, the impact will be relatively moderate. That’s because we in the U.S. spend one of the lowest shares of our disposable income on food in the world. Those on the lower end of the economic ladder may find it a greater burden than the averge American family. But the impact on the budgets of the poor is often lessened by food stamps.
So the price increases from the worst drought to hit farmers ever is just an aggravation to you. The big issue is really out on the farms.