Food Price Outlook, 2021
This page summarizes the March 2021 forecasts, which incorporate the February 2021 Consumer Price Index and Producer Price Index numbers.
See Changes in Food Price Indexes, 2018 through 2021 for data files.
The all-items Consumer Price Index (CPI), a measure of economy-wide inflation, increased by 0.5 percent from January 2021 to February 2021 before seasonal adjustment, up 1.7 percent from February 2020. The CPI for all food increased 0.2 percent from January 2021 to February 2021, and food prices were 3.6 percent higher than in February 2020.
The level of food price inflation varies depending on whether the food was purchased for consumption away from home or at home:
- The food-away-from-home (restaurant purchases) CPI increased 0.1 percent in February 2021 and was 3.7 percent higher than February 2020; and
- The food-at-home (grocery store or supermarket food purchases) CPI increased 0.2 percent from January 2021 to February 2021 and was 3.5 percent higher than February 2020.
In 2021 thus far compared to 2020 (reported as "Year-to-date avg. 2020 to avg. 2021"), food-at-home prices have increased 0.9 percent and food-away-from-home prices have increased 2.2 percent. The CPI for all food has increased an average of 1.5 percent. Of all the CPI food-at-home categories tracked by the Economic Research Service of the U.S. Department of Agriculture (USDA), the fresh fruits category has had the largest relative price increase (2.8 percent) and the beef and veal category the largest relative price decrease (0.8 percent).
In 2021, food-at-home prices are expected to increase between 1.0 and 2.0 percent, and food-away-from-home prices are expected to increase between 2.0 and 3.0 percent. Despite these predicted increases, inflation for all food categories is expected to be at or below their 20-year historical averages—except for nonalcoholic beverages and other foods.
Recent Historical Overview
Between the 1970s and early 2000s, food-at-home prices and food-away-from-home prices increased at similar rates. Since 2009, however, their rates of growth have diverged. While food-at-home prices deflated in 2016 and 2017, monthly food-away-from-home prices have been rising consistently since then. The divergence is partly due to differences between the costs of serving prepared food at restaurants and retailing foods in supermarkets and grocery stores.
In 2019, retail food-at-home prices rose 0.9 percent. This increase was the second in 4 years, but the rate was still below the 20-year annual average of 2.0 percent. While prices for poultry, eggs, fats and oils, and fresh fruits declined in 2019, prices for all other food categories increased. Fresh vegetables had the largest annual average increase of 3.8 percent in 2019 and eggs the largest annual average decrease of 10.0 percent.
In 2020, food-at-home prices increased 3.5 percent and food-away-from-home prices increased 3.4 percent. This convergence was largely driven by a rapid increase in food-at-home prices while food-away-from-home price inflation remained within 0.2 percentage points of the 2019 inflation rate. The largest price increases were for meat categories: beef and veal prices increased by 9.6 percent, pork prices by 6.3 percent, and poultry prices by 5.6 percent. The only category to decrease in price in 2020 was fresh fruits, by 0.8 percent.
CPI Forecast Changes This Month
CPI forecast ranges for meat categories and fresh fruits were revised upward this month. The forecast range for the category of other foods was revised downward.
Beef and veal prices increased 0.4 percent from January to February 2021, while other meat prices increased 0.2 percent. The meat price increases were driven by high feed costs and strong domestic and international demand, along with supply chain disruptions due to recent winter storms in the Midwest and Texas. However, beef prices are still 0.8 percent lower on average in 2021 than they were in 2020. Beef and veal prices are now predicted to decrease between 1.0 and 2.0 percent in 2021 — an adjustment upward from -2.5 to -1.5 percent, due to the recent price increases. Other meat prices are now predicted to increase between 0.0 percent and 1.0 percent. Price increases in individual meat categories have raised the price forecast ranges for the aggregate categories of meats and meats, poultry, and fish. Prices for both aggregate meat categories are now predicted to increase between 0.0 and 1.0 percent.
Fresh fruit prices increased 1.3 percent from January to February 2021, rendering them 5.4 percent higher than in February 2020. The increases were largely driven by the rise in apple prices of 2.7 percent from January to February and the rise in citrus prices of 1.0 percent. Fresh fruits are now predicted to increase between 1.0 and 2.0 percent in 2021. As a result, the price of the aggregate category of fresh fruits and vegetables is now predicted to increase between 1.0 and 2.0 percent.
Producer Price Index (PPI) for Food (not seasonally adjusted)
The Producer Price Index (PPI) is like the CPI in that it measures price changes over time. However, instead of measuring retail price changes, 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. Three major PPI commodity groups are of interest to food markets: unprocessed foodstuffs and feedstuffs (formerly called crude foodstuffs and feedstuffs), processed foods and feeds (formerly called intermediate foods and feeds), and finished consumer foods. These groups give a general sense of price movements across various stages of production in the U.S. food supply chain.
The PPIs—measures of changes in farm and wholesale prices—are typically far more volatile than the downstream CPIs. Price volatility decreases as products move from the farm to the wholesale sector to the retail sector. Because of multiple processing stages in the U.S. food system, the CPI typically lags movements in the PPI. The PPI is thus a useful tool for understanding what may soon happen to the CPI.
The USDA Economic Research Service does not forecast industry-level PPIs for unprocessed, processed, and finished foods and feeds. However, these prices have historically shown a strong correlation with the all-food and food-at-home CPIs.
High feed costs, increased demand, and supply chain disruptions due to winter storms in the Midwest and Southern States have driven up prices for wholesale meats and poultry. Wholesale beef prices are now predicted to decrease between 3.5 and 6.5 percent (an adjustment upward from -7.5 to -4.5 percent); wholesale pork prices are now predicted to increase between 3.0 and 6.0 percent and wholesale poultry prices are now predicted to increase between 1.0 and 4.0 percent. Egg prices are typically highly volatile and depend on the time of year; farm-level egg prices are currently predicted to increase between 0.0 and 3.0 percent. Domestic and international demand for soybeans remains high. The increased price of soybeans has led to increases in the prices of wholesale fats and oils, which are now expected to rise between 7.0 and 10.0 percent. Apple prices have increased due to port issues resulting from COVID-19. Recent winter weather storms have reduced citrus production, leading to price increases. Farm-level fruit prices are now predicted to increase between 1.5 and 4.5 percent; farm-level vegetable prices are now predicted to decrease between 0.0 and 3.0 percent.
For official USDA farm-level price forecasts, see: World Agricultural Supply and Demand Estimates at a Glance. For additional information, detailed explanations, and analyses of farm-level prices, see Economic Research Service Outlook publications including Livestock, Dairy, and Poultry, Oil Crops, Wheat, Fruit and Tree Nuts, and Vegetables and Pulses.
See Changes in Food Price Indexes, 2018 through 2021 for data files.