Experts: Restaurants may trump grocers in value as cost rise

WASHINGTON Pundits assessing the U.S. Department of Agriculture's newly downbeat food inflation forecast were conjecturing Thursday that price-conscious restaurants may represent greater value for consumers than would grocers that are less willing or able to absorb still-rising commodity costs.

The USDA on Wednesday warned that food prices would rise 5 percent to 6 percent this year, the biggest annual jump in 20 years and up from the annual range of 4.5 percent to 5.5 percent that the agency had forecast just last month. Recent rises in produce and especially meat provoked the revision, USDA economists said, warning that those trends would continue next year.

Food prices are expected to increase 4 percent to 5 percent for 2009, driven by poultry and red meat. However, for all of this year, the USDA said, eggs would be up 14 percent, fats and oils would increase 13.5 percent and cereals and baked goods would rise 9.5 percent, though prices for meat, poultry and fish would grow only 3 percent.

One day after the revised forecast, the public-radio business program "Marketplace" focused on the USDA's expectations for a doubling of meat inflation next year, and reporter John Dimsdale concluded: "One way to escape some of the inflation at the grocery store is to head for a restaurant. Analysts say restaurants aren't passing on all their raw material costs, to keep their customers coming. Don't feel like cooking tonight? By all means, go out."