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.
Background on the CPI for
Food
Although ERS analyzes changes in retail prices
for individual food items, sometimes it is useful
to record and analyze a measure of change for the
overall level of food prices.
The Consumer Price Index (CPI) is the most publicized
and most widely used measure of the general level
of prices in the U.S. economy. The CPI is a composite
measure of the level of average prices paid by urban
consumers for a defined market basket of goods and
services, including food.
The CPI for food at home is a component of the
full CPI and is the principal indicator of changes
in retail food prices. Policymakers, both public
and private, closely follow the CPI for food consumed
at home and its changes, which measure price inflation
for food items. The CPI for food consumed at home
also affects policy evaluation because the effects
of many current and proposed policies are evaluated
based on CPI measures. To contribute to the analysis
of government and commercial decisionmakers, ERS
estimates the future direction of changes in the
CPI for all food, food at home, and food away from
home (see data on the CPI
for food forecasts).
The food price level can be influenced by changes
in costs incurred by food system firms. Changes
in input costs can translate directly into changes
in the CPI or may have little or no effect. Researchers
at ERS not only produce forecasts of the CPI but
also analyze the impact of economic factors on changes
in the CPI, including changes in firms' costs. |
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