The US Department of Agriculture's chief economist has said that retail food prices are set to increase by 4-5% this year, as  the growth of the US ethanol industry pushes up commodity costs.

Joseph Glauber, chief economist for the Department of Agriculture, told Congress' Joint Economic Committee that if crops continue to be used for biofuel production, prices for staples and animal feeds would rise.

"The CPI for cereal and bakery products increased 4.4% in 2007, and is projected to rise 7.5-8.5% in 2008. The increase in the CPI for cereal and bakery products reflects higher prices for wheat, rice, corn, and other grains as well as higher marketing costs," Glauber said.

While much of the blame for the rising cost of food lies with biofuels production, Glauber also stressed that poor weather conditions, increased demand for food in developing countries and higher fuel costs have greatly contributed to the price rise.

"In recent years, the conversion of corn and soybean oil into biofuels has been an important factor shaping major crop markets. The amount of corn converted into ethanol and soybean oil converted into biodiesel nearly doubled from 2005/06 to 2007/08," Glauber told the committee.

American consumers should eventually see some relief from higher prices as foreign countries increase plantings for wheat and other crops, he said.

"The Department's current long-term projections indicate that retail food price inflation will gradually moderate over the next several years," Glauber concluded.