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Retail food price inflation rate likely to decrease in 2021

Wednesday, February 17, 2021

Food prices increased more rapidly than average in 2020, as the COVID-19 pandemic prompted shifts in consumption patterns and supply chain disruptions. However, researchers at the USDA, Economic Research Service (ERS) expect food price inflation to retreat over the course of 2021 and converge closer to the 20-year historical average. During the pandemic, supply chains pivoted from servicing restaurants to stocking retailers, primarily grocery stores. COVID-19 outbreaks disrupted agricultural production and processing, particularly in the meat sector, leading to reduced supply and higher prices. Societal and economic response to the pandemic will continue to influence food prices in 2021, and uncertainties about the future of disease transmission, stay-at-home orders, and vaccinations introduce challenges to forecasting food price inflation. Restaurant re-openings, supply chain adjustments, rates of unemployment, and shifting safety net programs may all affect food prices. Over time, inflation tends to revert to historical averages as years of high rates of inflation are often succeeded by years of low inflation. The years following the 2008 and 2011 price spikes offer examples of this pattern. This trend suggests food price inflation rates are likely to decrease in the wake of the COVID-19 pandemic, but there is substantial uncertainty about the rate of decline. Using data from the U.S. Bureau of Labor Statistics’ Consumer Price Index, ERS researchers project retail food prices will increase between 1 and 2 percent in 2021, at or below the 20-year average of 2 percent. More information on ERS’s monthly food price forecasts can be found in the ERS Food Price Outlook data product, which will be updated February 25, 2021.

Food-at-home price inflation varies across U.S. metro areas

Wednesday, January 13, 2021

From 2010 through 2019, retail—or grocery—food prices rose an average of 1.2 percent a year nationally. However, food-at-home price inflation varies by locality. Retail food prices rose an average of 1.7 percent a year in Honolulu over the decade, while price inflation in the Dallas-Fort Worth area averaged 0.6 percent a year. Averaging 10 years of annual data smooths out year-to-year “noise”—volatile price swings that are not indicative of the overall trend. Differences in transportation costs and retail overhead expenses, such as labor and rent, can explain some of the variation among cities because retailers often pass local cost increases on to consumers in the form of higher prices. Furthermore, differences in consumer preferences among cities for specific foods may help explain variation in inflation rates. For example, a city whose residents strongly prefer foods with less price inflation (such as fresh fruits and vegetables at 1.1 percent a year in 2010–19) might experience lower food-at-home price inflation than a city whose residents buy more beef and veal, which increased an average of 3.6 percent a year in 2010–19. This chart appears in an Economic Research Service data visualization, Food Price Environment: Interactive Visualization, released September 2020.

As of August, food-at-home prices in 2020 were above 2019 levels

Wednesday, September 30, 2020

Grocery store food prices—or food-at-home prices—were 4.6 percent higher in August 2020 than a year earlier. Changes in food-at-home prices are measured by the Consumer Price Index (CPI) for Food at Home. The CPI for Food at Home looks at prices for a specific set of grocery store foods and beverages bought in cities around the country and compares the price of this “market basket,” or indexes it, to 1982-84 prices. Indexing provides information on cumulative changes in food prices over time, answering the question: How much higher are food prices this year compared with last year or past years? Over January to December 2019, the monthly price index for food at home ranged from 241.2 to 242.6, indicating prices rose or fell by no more than 0.6 percent per month. Monthly food-at-home prices in 2020 display a different pattern. Food-at-home prices rose by an average of 0.5 percent in January, February, and March, followed by a jump of 2.7 percent in April and a continued rise in May and June. In July and August, prices fell by 1.0 and 0.1 percent, respectively. Even so, food-at-home prices remained higher than during the previous year. For context, annual inflation for food at home has averaged around 2 percent for the past 20 years. Food-at-home prices in 2020 were influenced by the coronavirus pandemic. The pandemic put pressure on several food industries, disrupting supply chains for commodities including dairy, beef, pork, and poultry. For a closer look at specific food categories, explore the Economic Research Service (ERS) Chart of Note on retail price changes between June 2019 and June 2020. The data for both charts come from the ERS’s Food Price Outlook data product.

Retail prices for nearly all food-at-home categories up in June 2020 compared with June 2019

Monday, July 27, 2020

Grocery store prices were 5.6 percent higher in June 2020 compared with June 2019. Retail prices increased for all food-at-home categories except for fresh fruits. Many of these increases were influenced by the coronavirus pandemic. The pandemic disrupted supply chains of several commodities—and affected consumers’ food spending patterns—which put upward pressure on wholesale and retail food prices. The spring 2020 closing of schools and stay-at-home orders resulted in the dairy industry having to shift from supplying products for schools and restaurants to supplying products for grocery stores and other food retailers (food at home). Adapting to this transition placed upward pressure on retail prices for dairy products, which rose by 5.1 percent from June 2019 to June 2020. Beef also experienced supply chain disruptions: decreased slaughter volumes due to COVID-19 led to a bottleneck in supply which boosted prices. Retail beef and veal prices in June 2020 were 25.1 percent higher than in June 2019. Much of this increase occurred after February 2020. Other commodities also saw increases in retail prices. Egg prices increased 12.1 percent since June 2019, and pork and poultry prices increased 11.8 and 8.7 percent, respectively. The data for this chart come from the Economic Research Service’s Food Price Outlook data product, updated July 24, 2020.

2020 inflation in grocery store food prices expected to remain low

Thursday, February 20, 2020

Grocery store food prices in the United States have seen low inflation or deflation since 2015. Given current conditions, ERS expects a continuation of the low inflation trend into 2020. Food-at-home prices are forecast to increase between 0.5 and 1.5 percent, below the current 20-year historic average of 2.0 percent. The previous period of low inflation in retail food prices, which occurred in 2009 and 2010, was due largely to the economy-wide downturn caused by the 2007-09 Great Recession. The current period of low food-price inflation, however, is taking place during a time of U.S. economic expansion. Contributing factors for this period of low food-price inflation include retail pricing strategies, efficient food supply chains, slow wage growth, and relatively low oil prices. Within grocery sub-categories, price changes in 2020 are expected to vary. More information on ERS’s monthly food price forecasts can be found in the ERS Food Price Outlook data product, which will be updated on February 25, 2020.

ICYMI... Inflation in grocery store food prices varies across U.S. metropolitan areas

Tuesday, September 24, 2019

Between 2009 and 2018, retail food prices rose an average of 1.2 percent per year nationally. However, food-at-home price inflation varies by geographic location. Over the same 10-year period, retail food prices rose an average of 1.7 percent per year in St. Louis, while prices in Dallas rose on average 0.6 percent per year. Averaging 10 years of annual data smooths out year-to-year “noise”—volatile price swings that obscure the bigger picture of relative food price increases by city. Different rates of change in transportation costs and retail overhead expenses, such as labor and rent, can explain some of the variation among cities because cost increases are often passed along to the consumer in the form of higher grocery prices. Furthermore, differences in consumer food preferences among cities for specific foods may help explain variation in inflation rates. For example, a city whose residents strongly preferred foods with little price inflation (such as pork and poultry at 1.4 and 1.5 percent per year, respectively, in 2009–2018) might have had a lower 10-year average inflation level than a city whose residents purchased more beef or veal, which increased an average of 3.4 percent per year in 2009–2018. This chart appears in an ERS data visualization, Food Price Environment: Interactive Visualization, released March 2019. This Chart of Note was originally published March 28, 2019.

Cost of a home-grilled cheeseburger up 8 cents from last year

Monday, July 1, 2019

If your July 4 cookout includes cheeseburgers, they will be a bit pricier than last year’s burgers. In May 2019 (latest available prices), the ingredients for a home-prepared quarter-pound cheeseburger totaled $1.75 per burger, with ground beef making up the largest cost at $0.96 and cheddar cheese accounting for $0.33. This same cheeseburger would have cost $1.67 to prepare in May 2018, an increase of 4.8 percent. Retail prices for one pound quantities of all of the ingredients, with the exception of bread, were higher in May 2019 compared with May 2018. Higher ground beef prices accounted for half of the 8-cent increase between 2018 and 2019, and cheddar cheese costs were 1 cent more per burger in May 2019. Iceberg lettuce and tomato prices rose the most—14.5 and 8.8 percent, respectively—but the small amount of these toppings added just 3 cents to per burger costs. More information on ERS’s food price forecasts can be found in ERS’s Food Price Outlook data product, updated June 25, 2019.

Inflation in grocery store food prices varies across U.S. metropolitan areas

Thursday, March 28, 2019

Between 2009 and 2018, retail food prices rose an average of 1.2 percent per year nationally. However, food-at-home price inflation varies by geographic location. Over the same 10-year period, retail food prices rose an average of 1.7 percent per year in St. Louis, while prices in Dallas rose on average 0.6 percent per year. Averaging 10 years of annual data smooths out year-to-year “noise”—volatile price swings that obscure the bigger picture of relative food price increases by city. Different rates of change in transportation costs and retail overhead expenses, such as labor and rent, can explain some of the variation among cities because cost increases are often passed along to the consumer in the form of higher grocery prices. Furthermore, differences in consumer food preferences among cities for specific foods may help explain variation in inflation rates. For example, a city whose residents strongly preferred foods with little price inflation (such as pork and poultry at 1.4 and 1.5 percent per year, respectively, in 2009–2018) might have had a lower 10-year average inflation level than a city whose residents purchased more beef or veal, which increased an average of 3.4 percent per year in 2009–2018. This chart appears in an ERS data visualization, Food Price Environment: Interactive Visualization, released March 2019.

2019 inflation in grocery store food prices expected to exceed that of 2018

Thursday, February 21, 2019

Over the last decade, grocery store food prices in the United States have had their ups and downs, with average annual prices decreasing as much as 1.3 percent in 2016 and increasing as much as 4.8 percent in 2011. Lower retail food price inflation in 2009 and 2010 reflected the economywide downturn caused by the Great Recession of 2007-09. Food-at-home prices rebounded in 2011 and rose between 0.9 and 2.5 percent annually in 2012-15. In 2016 and 2017, however, retail food prices declined because of increases in farm- and wholesale-level production, lower prices for oil and other production inputs, as well as exchange rates that made imported foods less expensive. In 2018, retail food prices rose 0.4 percent. ERS expects retail food prices to continue this upward trend in 2019, with overall food-at-home prices forecast to increase between 1 and 2 percent. Consumers can expect some variation among grocery subcategories. For instance, retail dairy prices are expected to rise between 3 and 4 percent, while prices for fats and oils are expected to decrease by between 2 and 3 percent. More information on ERS’s food price forecasts can be found in ERS’s Food Price Outlook data product, updated February 21, 2019.

Prices for most baking ingredients decline in 2018

Tuesday, December 18, 2018

This holiday season, baking essentials could cost less than they did last year. A basket comprising a dozen eggs, a 1-pound container of margarine, a 5-pound bag of flour, 4-pound bag of sugar, and a gallon of whole milk cost $10.85 in October 2018 compared to $11.57 in October 2017, a decrease of 6.2 percent. This decrease is driven by lower prices in 2018 across four of the five foods. The largest savings are found in flour, sugar, and milk—flour prices are down 9.4 percent, sugar prices fell 9.3 percent, and whole milk prices are 7.8 percent lower. Egg prices, on the other hand, increased 7.8 percent or 12 cents per dozen. Due in part to prices adjusting from lows in 2016 and 2017, egg prices have been moving upward in much of 2018. However, additional savings could be found in December as grocers often offer discounts on holiday food items. More information on ERS’s food price forecasts can be found in ERS’s Food Price Outlook data product, updated November 21, 2018.

Food prices less volatile than transportation prices

Wednesday, July 18, 2018

The 1970s were a decade of volatile prices for consumers’ top three spending categories—housing, transportation, and food. Annual food price inflation during the 1970s averaged 8.1 percent, and food prices rose by 10 percent or more in 3 of the 10 years. Yearly price changes for housing costs, which include rents, utilities, and household furnishings, averaged 7.6 percent during the decade and peaked at 15.7 percent in 1980. And price changes for transportation (prices of vehicles, gasoline and diesel fuel, and public transportation) topped 10 percent in 1974, 1976, and 1979 and jumped 17.9 percent in 1980. Since that time, prices for food and housing have become comparatively more stable than transportation prices, which continue to be volatile from year to year. Food prices in 2016 and 2017 changed little as decreasing prices for food commodities and energy offset rising costs for other food processing, marketing, and food service inputs. At the same time, a strong U.S. dollar lowered the cost of imported foods. This chart appears in “Five Decades of Price Swings for Food and Other Consumer Spending Categories” in the July 2018 issue of ERS’s Amber Waves magazine.

Home-grilled cheeseburger costs are beefier today than they were 20 years ago

Monday, July 2, 2018

If cheeseburgers are on your menu for July 4, they will cost you 20 percent more than their inflation-adjusted cost from 20 years ago. And that greater cost is due to higher ground beef prices. In 2018, the ingredients for a home-prepared, quarter-pound cheeseburger total $1.69, with ground beef making up the largest cost at $0.92. This same cheeseburger would have cost $0.91 to prepare in 1998, the equivalent of $1.40 in 2018 dollars, with ground beef accounting for $0.55 in 2018 dollars. Today’s higher ground beef prices in grocery stores likely reflect cattle supply disruptions in the early 2000s and early 2010s, resulting in higher-than-average increases in retail ground beef prices during those years. Although U.S. beef production has since increased, prices are slower to retreat at the retail level. In contrast, efficiencies throughout the food supply chain helped lower prices for the other cheeseburger ingredients. Inflation-adjusted retail bread prices between 1998 and 2018 fell by 2.8 percent, tomato prices by 12.3 percent, lettuce prices by 27.9 percent, and cheddar cheese prices by 5.7 percent. More information on ERS’s food price forecasts can be found in ERS’s Food Price Outlook data product, updated June 25, 2018.

Recent food price inflation in line with overall inflation

Thursday, May 17, 2018

From 2013 to 2017, the Consumer Price Index (CPI) for all food (grocery store and restaurant food) rose by 5.5 percent. This increase was relatively in line with the 5.2-percent rise in the all-items CPI, indicating that food prices were rising only moderately faster than prices for consumer goods and services as a whole. Over the last couple years, rising restaurant prices have contributed to food price inflation outpacing prices for recreation, education and communication, apparel, and transportation. Apparel and transportation prices actually declined from 2013 to 2017. Medical care and housing were the only two major consumer spending categories whose prices rose faster than food prices during this time period. Food-price inflation outpacing economy-wide inflation is not a recent phenomenon. Over the last decade, food-price inflation averaged 2.1 percent per year and overall inflation averaged 1.7 percent per year. Price inflation for food at home, however, averaged 1.8 percent per year during 2013-17, in line with economy-wide inflation. This chart appears in ERS’s data product, Ag and Food Statistics: Charting the Essentials.

Retail price changes for most food categories were small in 2017

Tuesday, April 24, 2018

With the exception of eggs, 2017 was a year of relative stability for grocery store prices. Lower agricultural commodity prices and a relatively strong U.S. dollar (which can make imported foods less expensive) contributed to smaller than average price increases and, for some foods, price decreases. The largest increase was for fish and seafood prices, which rose 1.2 percent—still well below the category’s 20-year historical average of 2.5 percent per year. Beef and veal prices fell 1.2 percent, cereals and bakery products were down 0.5 percent, and retail prices for sugars and sweets and fresh vegetables both fell by 0.1 percent in 2017. The food category with the largest price change in 2017 was eggs—a category prone to yearly price swings. Retail egg prices fell 9.5 percent in 2017, as egg production continued to recover from lows in 2015 due to the Highly Pathogenic Avian Influenza. Eggs account for 1.3 percent of food-at-home spending, so their large price swings have muted effects on overall grocery store inflation. This chart appears in an ERS data visualization, Food Price Environment: Interactive Visualization, released February 2018.

Grocery store food prices fell 0.2 percent in 2017

Thursday, February 22, 2018

2017 marked the second consecutive year that average grocery store prices declined. At-home food prices in 2017 were 0.2 percent lower than 2016 prices. This decline followed a larger 1.3-percent drop in 2016—the first decline in annual grocery store prices since 1967. In contrast to falling food prices, overall inflation (prices for all goods and services, including food) rose by 1.3 percent in 2016 and by 2.1 percent in 2017. During 2016-17, lower food-at-home prices were driven, in part, by increased U.S. production of agricultural commodities, such as beef cattle and eggs, lower transportation costs due to lower oil prices, and a strong U.S. dollar which can make imported foods less expensive. Grocery store price changes can be volatile year to year, however the 20-year moving average, or average price change for the previous 20 years, has been slowly declining from 4 percent in 1998 to 3.1 percent in 2008 to 2.1 percent in 2017. More information on ERS's food price forecasts can be found in ERS's Food Price Outlook data product, updated February 22, 2018.

Food is the third largest spending category for American households at 12.6 percent

Monday, December 11, 2017

The average American household spent a slightly larger percentage of its income on total food—grocery and restaurant purchases—in 2016 than in 2015. The increase from 12.5 percent of expenditures in 2015 to 12.6 percent in 2016, possibly reflects 2016’s 0.3-percent rise in total food prices, combined with the 2.1-percent decline in transportation costs. With a 12.6 percent share, food ranked third behind housing (33 percent) and transportation (15.8 percent) in a typical American household’s 2016 expenditures. Breaking down food spending further, 7.1 percent of expenditures were spent at the grocery store and 5.5 percent at restaurants. Looking at expenditure shares over time, food’s share has steadily declined since 1984 (the first year of available data), when food expenditures accounted for 15 percent of consumer spending. As the share for food has declined, the shares of income spent on housing, health care, and entertainment have increased from 1984. This chart is one of the 34 charts and maps that can be found in the ERS publication, Selected charts from Ag and Food Statistics: Charting the Essentials, October 2017.

Bringing pumpkin pie to Thanksgiving dinner? A homemade one will cost you $4.12 this year

Monday, November 20, 2017

Errata: On November 20, 2017, the text was corrected to reflect that butter, sugar, and pie pumpkins were more expensive in September 2017 compared to September 2016, and flour and egg prices were lower.


As the fourth Thursday in November approaches, some shoppers may wonder how food price inflation will affect the cost of their favorite dishes, including pumpkin pie. In fact, for many Americans, it might be hard to imagine a Thanksgiving feast without it. In September 2017, the ingredients for a pumpkin pie totaled $4.12, with pumpkin making up 65 percent of that cost and butter accounting for 15 percent. This same pie would have cost $3.24 to bake in September 2016. Flour and egg prices were lower in September 2017 compared to September 2016, while milk prices remained relatively flat. Butter, sugar, and pie pumpkins—smaller, rounder, and denser than carving pumpkins—were all more expensive in September 2017 compared to a year earlier. Additional savings could be found this November, as retail stores often offer specials on holiday baking staples. More information on ERS’s food price forecasts can be found in ERS’s Food Price Outlook data product, updated October 25, 2017.

A perk with today’s home-brewed coffee—it costs less than 30 years ago

Monday, September 25, 2017

Friday, September 29 is National Coffee Day, and according to a National Coffee Association survey, 62 percent of adult Americans are coffee drinkers—either brewed at home or purchased on the go or as part of a restaurant meal. For those waking up to the aroma of home-brewed coffee, they can also enjoy the fact that their cup of morning coffee costs less today than it did 30 years ago, when adjusted for inflation. In 2017, a 12-ounce cup of coffee costs, on average, 19.1 cents to brew at home. That same cup of coffee cost 12.2 cents in 1987. But when adjusted for inflation, that 12.2 cents is equivalent to 26.3 cents in 2017 dollars. For those who prefer their daily joe with milk and sugar, that adds 3.1 cents in 2017 compared with 4.5 cents in 1987 in 2017 dollars. Thus, the cost of a home-prepared cup of coffee has declined by just over a fourth over the past three decades. So, sit back and enjoy a second cup this Friday. More information on ERS’s food price data can be found in the Food Price Outlook data product, updated September 25, 2017.

Inflation in grocery store food prices varies across U.S. metropolitan areas

Friday, September 1, 2017

Increasing prices (inflation) for food sold in supermarkets, supercenters, convenience stores, and other retailers differ by U.S. metropolitan statistical areas (MSAs). For example, from 2007 to 2016, retail food prices rose 26.4 percent in Pittsburgh but only 12.8 percent in Anchorage. Several factors account for variations in food price inflation across MSAs. Changes to the costs associated with transporting food products to the grocery store can vary geographically, and volatile fuel prices can contribute to variation in retail food price inflation across MSAs. Fluctuations in retail overhead costs, such as labor and rent, may also differ from one area to another. Increases in retail overhead costs are often passed onto consumers as higher prices. However, in MSAs with falling consumer incomes, grocers may not be able to pass on price increases to budget-constrained consumers, dampening food price inflation. This chart appears in the ERS data product, Food Price Outlook, updated July 25, 2017.

Changes in farm commodity prices have a muted effect on grocery store and restaurant prices

Friday, July 21, 2017

Favorable weather conditions as well as droughts and floods can lead to changes in production levels of farm commodities and, in turn, swings in their prices. Volatility in farm commodity prices—measured by the Producer Price Index (PPI) for Farm Products—and in intermediate foods—measured by the PPI for Processed Foodstuff and Feedstuff—is often greater than price volatility in grocery stores and restaurants. Intermediate foods, such as vegetable oils and refined sugar, are used to produce final foods like cookies and bread. Prices at each stage generally move in the same direction, but the magnitude of the price changes varies. For instance, in 2016 the Farm Products PPI declined by 9.7 percent, the Processed Foodstuff and Feedstuff PPI fell by 2.7 percent, while the Consumer Price Index (CPI) for All Food (foods purchased in stores and eating places) rose, slightly, by 0.3 percent. Price fluctuations for intermediate foods and final foods are muted relative to that of farm products, since foods at later stages of production include less volatile costs for processing, transportation, packaging, and other wholesale and retail overhead costs. According to ERS’s Food Dollar Series, farm and agribusiness costs only represented 10.8 cents of every dollar spent on domestically-produced food in 2015. This chart is from ERS’s Food Price Outlook data product, updated July 3, 2017.

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