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 2.0 to 3.0 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 1.0 to 2.0 percent, while food-away-from-home prices are forecast to increase 3.5 to 4.5 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 cereal 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

September 2009 Prices

The CPI for all food decreased from August to September 2009, was unchanged from July to August, and is now 0.2 percent below the September 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—a phenomenon that has not been seen in 42 years. The food-at-home index decreased 0.2 percent in September 2009 and is now 2.5 percent below last September, while the food-away-from-home index increased 0.1 percent and is now 2.6 percent above last September. The all-items CPI increased 0.1 percent in September but is 1.3 percent below the September 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 0.4 percent in September—the ninth price decrease in the past 11 months—and are 5.2 percent below last September. Pork prices were down 0.7 percent in September, the sixth price decrease in the past 9 months, and are now 6.5 percent below last September’s level. Poultry prices decreased 1 percent in September and are also down 1 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 decreased 1.2 percent in September and are 17.9 percent below the September 2008 level.

Dairy prices were up 0.5 percent in September but are still 9.5 percent below the September 2008 level. Within the dairy category, prices changed as follows in September: milk prices increased 0.5 percent (only the second price increase in the past 13 months) and are 16 percent below last September’s prices; cheese prices were up 0.7 percent but are 10.1 percent below last September’s level; ice cream and related product prices increased 1.2 percent but are unchanged from last September's level; and butter prices decreased 0.6 percent this month and are 9.2 percent below last September.

Fresh fruit prices increased a completely seasonal 0.9 percent in September, due to an increase in citrus and other fresh fruit prices, while apple prices decreased 2.4 percent and banana prices decreased 0.4 percent. The fresh fruit index is now down 10.4 percent overall from last year at this time, with apple prices down 22 percent, banana prices down 4.3 percent, citrus fruit prices down 8.6 percent, and other fresh fruit prices down 7.8 percent. The fresh vegetable index decreased 0.8 percent in September, due to decreases in potato, tomato, lettuce, and other fresh vegetable prices. Since last year at this time, fresh vegetable prices are down 8 percent, with lettuce prices down 8.2 percent, potato prices down 15.5 percent, tomato prices down 8.3 percent, and other fresh vegetable prices down 4.7 percent.

Cereals and bakery product prices decreased 0.5 percent from August to September 2009 and are up 0.1 percent from last year at this time, with rice prices down 8.3 percent but breakfast cereal prices up 1.8 percent over the past year. Sugar and sweets prices were up 0.8 percent from August to September 2009 and are 3.7 percent above last September. Within the nonalcoholic beverages category, prices changed as follows in September: carbonated drink prices were down 0.5 percent but are still up 2.1 percent from September 2008; coffee prices were down 0.3 percent and are 2.6 percent below last September; and nonfrozen noncarbonated juices and drinks prices were up 0.9 percent in September and are 0.3 percent above the September 2008 level.