US warns food prices set to rise

Food prices are likely to rise in the US next year due to a drought gripping large parts of the Midwest, the US department for agriculture has warned.

It forecasted that the price of milk, eggs and meat would all rise above the normal rate of inflation as the dry weather increased animal feed costs.

Prices are expected to increase by between 3% and 4% in 2013, with beef prices expected to jump by up to 5%.

The drought, which is affecting much of the Midwest, is the worst since 1956.

Corn and soybean prices soared recently as fields dried out and crops withered.

Disaster aid

"The drought is really going to hit food prices next year," Richard Volpe, of the US department for agriculture told Reuters.

He added that the pressure on food prices would begin to build later this year.

"It's already affecting corn and soybean prices, but then it has to work its way all the way through the system into feed prices and then animal prices, then wholesale prices and then, finally, retail prices," he added.

Normal inflation for groceries in the US is about 2.8% per year, AP reports.

The drought is not expected to affect US fruit and vegetable prices as most of these crops are irrigated.

Volpe said that before the drought hit, this year was forecast to produce a record yield for the corn crop.

But, after weeks of hot, dry weather and no rainfall, a total of 1,369 counties in 31 states across the country have now been designated for disaster aid.

The USDA said that two-thirds of the US was now in mild or extreme drought.

There are fears that rising prices in the US will have an impact further afield as the country is the world's largest exporter of corn, soybeans and wheat.

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