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.
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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