The Consumer Price Index (CPI) for food is a component of the all-items CPI. The CPI measures the average change over time in the prices paid by urban consumers for a representative market basket of consumer goods and services. While the all-items CPI measures the price changes for all consumer goods and services, including food, the CPI for food measures the changes in the retail prices of food items only. ERS's monthly update is usually released on the 25th of the month; however, if the 25th falls on a weekend or a holiday, the monthly update will be published on either the 23rd or 24th.
New report on price forecasting methodology released
ERS has released a new report, How USDA Forecasts Retail Food Price Inflation, which provides a detailed outline of ERS's forecasting methodology, along with measures to test the precision of the estimates (May 2015).
At ERS, work on the CPI for food consists of several activities. ERS reports the current index level for food, examines changes in the CPI for food, and constructs forecasts of the CPI for food for the next 12-18 months. Forecasting the CPI for food has become increasingly important due to the changing structure of food and agricultural economies and the important signals the forecasts provide to farmers, processors, wholesalers, consumers, and policymakers.
As a natural extension of ERS's work with the CPI for food, ERS also analyzes and models forecasts for the Producer Price Index (PPI). The PPI is similar to the CPI in that it measures price changes over time; however, instead of measuring changes in retail prices, the PPI measures the average change in prices paid to domestic producers for their output. The PPI collects data for nearly every industry in the goods-producing sector of the economy. Changes in farm-level and wholesale-level PPIs are of particular interest in forecasting food CPIs.