The tagging of items with radio frequency identification (RFID) will take off in 2007 to become the biggest market by value by 2016 as prices fall dramatically, according to a forecast by a market analyst.

RFID has long been touted as the future of logistics for all companies by allowing retailers and suppliers to track goods throughout the supply chain. Regulations on traceability and mandates from such giant retailers as Wal-Mart and Metro are slowing forcing processors to make investments in the technology at the pallet and case level. High prices for tags and systems has been the major barrier to item-level use.

Item-level tagging refers to the use of the technology with the smallest unit of saleable goods, such as luxury foods and drinks.

IDTechEx said its research indicates that item level tags and systems will be the world's largest RFID market by value from 2007 onwards. Item level RFID tagging will rocket to $13 billion in 2016 from $0.16 billion in 2006 for systems including tags.

In 2006, about 200 million items were RFID tagged around the world. The firm predicts that 550 billion items may be RFID tagged in 2016.