(UPDATED COVERAGE, July 31) Slowing from the 5% inflation clip of 2008, consumer prices for fresh fruits and vegetables should increase 3% to 4% in 2009, according to the U.S. Department of Agriculture.

The USDA Economic Research Service also predicts the 2010 inflation rate for fresh fruits and vegetables at 3% to 4%.

The forecasts were part of a broader look at food prices by USDA in which the agency said the consumer price index for all food is expected to increase 2.5% to 3.5% in 2009 and 3% to 4% in 2010. In contrast, the consumer price index for all food rose 5.5% in 2008, which was the steepest increase since 1990.

The study found that lower commodity and energy costs, mixed with downturns in the U.S. and global economies, have pulled food inflation lower.

The USDA report said food consumed at home should increase in price by 2% to 3% this year, contrasted with a 3.5% to 4.5% price gain for food purchased away from home.

In June, the USDA reported that fresh fruit prices declined 1.7% because of a decrease in banana and other fresh fruit prices. The agency said the overall fresh fruit index is down 6.8% overall from last year at the same time.

Several major produce commodities are trading at below year-ago prices.

Retail prices reported by the Bureau of Labor Statistics showed that U.S. red delicious apples averaged $1.18 per pound in June, compared with $1.36 per pound in June 2008.

Banana prices were about the same, at 62 cents per pound in June compared with 63 cents per pound for the same period a year ago.

Meanwhile, the fresh vegetable price index was rose 0.1% in June, but remains 3.4% lower than the same time a year ago, the USDA said. Tomato retail prices averaged $1.60 per pound in June, off from $1.81 per pound at the same time a year ago.

Lucky Hicks, senior vice president of perishables for Associated Wholesale Growers, Kansas City, Kan., said he has seen substantial deflation in the produce department compared with last year.

He said transportation costs for fresh produce commodities may be off 15% to 20% compared to a year ago, which has contributed to lower prices.

Average retail pricing for cherries was off perhaps 40% in July because of a bigger crop of cherries from Washington.
“That has a huge impact in July,” he said July 30.

Stone fruit prices were relatively flat despite shorter volume and good quality from California.

Selling larger consumer packages was one way to beat deflation, Hicks said. Deals on blueberries in 18-ounce, 22-ounce and 2-pound clamshells help retailer revenues and keep consumers happy, he said.