Food CPI and Expenditures: Analysis and Forecasts of the CPI for Food

Overview Background Analysis and Forecasts of the CPI for Food What's Behind the Forecasts? How Changes in Input Costs Affect Food Prices CPI Bias Three Types of Food Expenditures Series Measuring the ERS Food Expenditure Series Recommended Data Recommended Readings Related Links

On the Accuracy of Nielsen Homescan Data

Food Price Outlook, 2009

In 2009, the Consumer Price Index (CPI) for all food is projected to increase 1.5 to 2.5 percent, as lower commodity and energy costs combine with weaker domestic and global economies to pull inflation down from 2008 levels. Pressure on retail food prices has subsided, resulting in low-to-moderate food price inflation in 2009.

Food-at-home prices are forecast to increase 0.5 to 1.5 percent, while food-away-from-home prices are forecast to increase 3.0 to 4.0 percent in 2009. The all-food CPI increased 5.5 percent between 2007 and 2008, the highest annual increase since 1990. Food-at-home prices, led by fats, and oil prices (up 13.8 percent) and cereals and bakery product prices (up 10.2 percent), increased 6.4 percent, while food-away-from-home prices rose 4.4 percent in 2008.

See ERS data on CPI for food and CPI forecasts

October 2009 Prices

The CPI for all food increased 0.1 percent from September to October 2009, decreased 0.1 percent from August to September, and is now 0.6 percent below the October 2008 level. For the first time since 1967, the food CPI is below the previous year's level as declines in meat, dairy, and produce prices have pushed the food CPI to negative levels. The food-at-home index increased 0.1 percent in October 2009 and is now 2.8 percent below last October, while the food-away-from-home index increased 0.1 percent and is now 2.2 percent above last October. The all-items CPI increased 0.1 percent in October but is 0.2 percent below the October 2008 level, mostly due to the large decline in energy prices during the past year. As energy prices have started to rise over the past few months, overall consumer inflation should soon return to positive annual levels and put an end to the recent deflationary period.

Beef prices decreased 0.5 percent in October—the tenth price decrease in the past 12 months—and are 6.7 percent below last October. Pork prices were down 1.3 percent in October, the seventh price decrease in the past 10 months, and are now 7.4 percent below last October’s level. Poultry prices decreased 0.6 percent in October and are down 1.3 percent from last year at this time. As substantially lower feed and energy costs were incorporated into meat production costs over the past 9 months, retail meat prices are now lower than last year. However, the resurgence in feed and energy commodity costs as the overall economy begins to recover from the recession may curtail the current deflationary period.

Egg prices were virtually unchanged in October but are 15.6 percent below the October 2008 level.

Dairy prices were up 1 percent in October but are still 8.2 percent below the October 2008 level. Within the dairy category, prices changed as follows in October: milk prices increased 1.5 percent (only the third price increase in the past 14 months) and are 13.2 percent below last October’s prices; cheese prices were up 0.6 percent but are 9.1 percent below last October’s level; ice cream and related product prices increased 2.6 percent but are 0.2 percent below last October's level; and butter prices decreased 0.9 percent this month and are 12.8 percent below last October.

Fresh fruit prices increased a mostly seasonal 1.5 percent in October, due to a 7.5-percent increase in other fresh fruit prices, while apple prices decreased 6.2 percent, banana prices decreased 1.2 percent, and citrus prices decreased 1.7 percent. The fresh fruit index is now down 7.2 percent overall from last year at this time, with apple prices down 18.2 percent, banana prices down 4.5 percent, citrus fruit prices down 5.5 percent, and other fresh fruit prices down 4.2 percent. The fresh vegetable index increased a completely seasonal 0.7 percent in October, due to increases in tomato and other fresh vegetable prices. Since last year at this time, fresh vegetable prices are down 8.3 percent, with lettuce prices down 10.8 percent, potato prices down 17.1 percent, tomato prices down 4 percent, and other fresh vegetable prices down 5.6 percent.

Cereals and bakery product prices increased 0.1 percent from September to October 2009 but are down 0.6 percent from last year at this time, with rice prices down 9.5 percent but cookie prices up 2.2 percent over the past year. Sugar and sweets prices were down 0.1 percent from September to October 2009 but are 3.3 percent above last October. Within the nonalcoholic beverages category, prices changed as follows in October: carbonated drink prices were up 1.1 percent and are up 1.5 percent from October 2008; coffee prices were down 0.7 percent and are 2.8 percent below last October; and nonfrozen noncarbonated juices and drinks prices were down 1.4 percent in October and are 1.9 percent below the October 2008 level.