Food Price Outlook, 2013
Despite the severe drought in the Midwest, retail food prices were mostly flat in 2012. Prices rose for beef and veal, poultry, fruit, and other foods in 2012; however, prices fell for pork, eggs, vegetables, and nonalcoholic beverages. For the remaining food categories, prices were unchanged for the most part. The drought has affected prices for corn and soybeans as well as other field crops which should, in turn, drive up retail food prices. However, the transmission of commodity price changes into retail prices typically takes several months to occur, and most of the impact of the drought is expected to be realized in 2013.
Based on current conditions, ERS's inflation forecast for both all food and food-at-home (grocery store) prices in 2013 is for increases of 2.5 to 3.5 percent. This forecast means that prices are likely to increase more than in 2012, but that overall inflation is expected to be near the historical average for both indexes. Inflation is expected to remain strong, especially in the first half of 2013, for most animal-based food products due to higher feed prices. For most food categories not directly affected by the 2012 drought, however, inflation is expected to be at or even below normal levels.
See Changes in Food Price Indexes, 2011 through 2013 .
April 2013 Prices (Not Seasonally Adjusted)
The CPI for all food increased 0.2 percent from March to April, was unchanged from February to March, and is now 1.5 percent above the April 2012 level. The food-at-home CPI increased 0.1 percent in April and is up 1 percent from last April, while the food-away-from-home (restaurant) index increased 0.3 percent in April and is up 2.3 percent from last April. The all-items CPI fell 0.1 percent in April and is 1.1 percent above the April 2012 level. The overall direction of prices in 2013 continues to be mixed, and the food-at-home CPI remains unchanged thus far in 2013.
Beef prices were down 0.5 percent in April and are 1.8 percent above last April, with steak prices down 0.2 percent and ground beef prices up 2.7 percent. Pork prices decreased 0.6 percent in April and are 1.6 percent below last April's level. A decline in exports and increased hog production have resulted in retail pork prices for the first 4 months of 2013 that are well below those of 2012. Overall, the drought has not had a discernable effect on pork prices, and ERS has revised its forecast for pork prices downward to 1 to 2 percent.
Poultry prices increased 0.7 percent in April; poultry prices are 4.2 percent above prices last year at this time, with chicken prices up 4.4 percent and other poultry prices (including turkey) up 3.4 percent. Fish and seafood prices were up 3 percent from March to April and are 2.3 percent above the April 2012 level.
Egg prices rose 1 percent in April and are now 3.1 percent above the April 2012 level. Egg prices are expected to fully reflect the impact of higher feed corn prices sooner than many other food products but are also subject to strong seasonal swings in pricing.
Dairy prices were flat from March to April, compared with a 0.6-percent decrease from February to March. Dairy prices are now 0.6 percent below the April 2012 level. Within the dairy category, prices changed as follows in April: milk prices decreased 0.4 percent and are 1.8 percent above last April's prices; cheese prices were down 0.2 percent and are 0.4 percent above last April's level; ice cream and related product prices rose 0.3 percent and are 0.6 percent below last April's level; and butter prices decreased 0.1 percent this month and are 3.2 percent above last April. It is increasingly apparent that the surge in fluid milk prices in the final quarter of 2012 accounted for much of the impact of the drought and higher feed prices.
Fresh fruit prices decreased 0.5 percent in April, and the fresh fruit index is up 1.4 percent from last year at this time, with apple prices up 10.3 percent, banana prices down 2.4 percent, citrus fruit prices up 1.3 percent, and other fresh fruit prices down 0.5 percent. The fresh vegetable index decreased 2.7 percent in April. Since last year at this time, fresh vegetable prices are up 4.6 percent, with potato prices down 8.6 percent, lettuce prices up 14.8 percent, tomato prices up 6.7 percent, and other fresh vegetable prices up 6.1 percent. Vegetable prices are rebounding in 2013 after declining for most of 2012. Processed fruit and vegetable prices fell 0.3 percent in April and are down 0.5 percent from the April 2012 level.
Cereal and bakery product prices increased 0.7 percent from March to April and are up 1.3 percent from last year at this time, with bread prices up 2.8 percent and breakfast cereal prices down 0.6 percent over the past year. The impact of dry conditions in the Midwest on wheat prices has been moderate compared with other commodities. Sugar and sweets prices were down 0.1 percent in April and are 1.8 percent below the April 2012 level. Prices have remained low for sugar and sweets partly due to strong sugar production in the United States and Mexico, and ERS has revised its forecast for sugar and sweets downward to 1 to 2 percent. Prices for nonalcoholic beverages, including coffee and carbonated beverages, are unchanged in April and are down 0.2 percent from last year.
The index for fats and oils was down 0.1 percent from March to April and is 0.8 percent below the April 2012 level. Soybean prices faced pressure in 2012 from both decreased production in South America as well as the drought in the U.S. Inflation for this category is expected to moderate in 2013, following two consecutive years of significant price increases.