Summary Findings

Food Price Outlook, 2019

This page provides the following information for March 2019:

• Consumer Price Index (CPI) for Food (not seasonally adjusted)
• Producer Price Index (PPI) for Food (not seasonally adjusted) 

Consumer Price Index (CPI) for Food (not seasonally adjusted)

The all-items Consumer Price Index (CPI), a measure of economy-wide inflation, was up 0.6 percent from February to March 2019 and is 1.9 percent above the March 2018 level. The CPI for all food rose 0.2 percent from February to March 2019, and food prices were 2.1 percent higher than the March 2018 level. The degree 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 0.2 percent in March and is 3.0 percent higher than March 2018; and
• The food-at-home (grocery store or supermarket food items) CPI rose 0.2 percent from February to March and is 1.4 percent higher than last March.

In 2018, retail food prices rose 0.4 percent. This was the first increase in 3 years, but the rate was still below the 20-year historical annual average of 2.0 percent. While prices for pork, other meats, dairy, and processed fruits and vegetables declined between 2017 and 2018, prices for all other major food categories increased. Eggs saw the largest annual average increase at 10.8 percent.

Between the 1970s and early 2000s, food-at-home prices and food-away-from-home prices increased at similar rates. Since 2009, however, food-at-home and food-away-from-home price growth has diverged. While grocery prices have deflated in recent years, restaurant prices have been rising consistently month-over-month. These differences are due, in part, to variations in the cost structure of restaurants versus supermarkets or grocery stores. Restaurant prices primarily comprise labor and rental costs with only a small portion going toward the food being served. For this reason, decreasing farm-level and wholesale food prices, which have exerted downward pressure on food-at-home prices, have had less of an impact on restaurant menu prices.

ERS revises its food price forecasts if the conditions (such as the feed grain crop outlook or weather-related crop conditions) on which they are based change significantly.

In 2019, price growth may continue to remain low at the grocery store. Food-at-home prices are expected to rise between 0.5 and 1.5 percent, as potentially the fourth year in a row with deflating or lower-than-average inflating retail food prices. Several products could continue to see lower prices, including pork, other meats, eggs, fats and oils, and processed fruits and vegetables. Beef and veal, poultry, fish and seafood, sugars and sweets, nonalcoholic beverages, and other foods are all expected to increase but at rates lower than their 20-year historical averages. Dairy products and cereal and bakery products are expected to increase at rates greater than their 20-year historical averages. In addition to commodity prices, prices for other factors of production may influence retail food prices in 2019. Electricity and diesel costs, as well as many other costs associated with food production, transport, and retail sales, are expected to rise, placing upward pressure on prices. Food-away-from-home prices are expected to continue growing at a consistent rate and to rise between 2.0 and 3.0 percent in 2019.

Changes to Food Category CPI Forecasts

The food-at-home CPI is an average of individual food CPIs, weighted by their relative importance or share of consumer expenditures.

Retail egg prices continued to fall, with a 0.9-percent decline from February to March and an 8.0-percent decline from the previous year. Retail egg prices are among the most volatile retail food prices. An increasing supply of eggs has put downward pressure on whole egg prices this year. Unlike the 10.8-percent increase in retail egg prices in 2018, retail egg price expectations have been revised downward and are expected to decrease between 3.0 and 2.0 percent in 2019.

Fats and oils retail prices increased slightly by 0.1 percent from February to March and are up 0.7 percent from March of last year. Butter prices—a key component—are up 5.8 percent from this time last year. Margarine prices remain constant, and peanut butter is down 1.0 percent from March 2018. In 2018, fats and oils experienced only a 0.1-percent price increase. The forecast for 2019 has been revised upward, so that prices for fats and oils are expected to decrease between 2.0 to 1.0 percent in 2019.

Fresh vegetable prices increased 0.3 percent from February to March and are 7.7 percent higher than in March 2018. Fresh vegetable prices rose 1.1 percent in 2018 and are expected to increase between 1.0 and 2.0 percent in 2019. 

See Changes in Food Price Indexes, 2017 through 2019.

Key Month-To-Month Changes in the Food CPI

Dairy product prices increased 0.4 percent from February to March 2019 and are up 0.5 percent from the same time last year. Fresh whole milk prices increased 2.2 percent since March 2018, and fresh milk (other than whole) prices also increased 3.1 percent since last year. Cheese prices decreased 2.0 percent year-over-year, while prices for other dairy and related products increased 1.4 percent since March 2018. The price forecast for dairy has not been adjusted this month, and ERS expects retail dairy prices to rise 2.0 to 3.0 percent in 2019. This is one of the few predictions that falls above the 20-year historical average of 1.9 percent for dairy products.  

Producer Price Index (PPI) for Food (not seasonally adjusted)

The Producer Price Index (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. Of particular interest to food markets are three major PPI commodity groups—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 the various stages of production in the U.S. food supply chain.

The intermediate and final demand PPIs—measures of changes in farm and wholesale prices—are typically far more volatile than their counterparts in the CPI. Price volatility decreases as products move from the farm to the wholesale sector to the retail sector. Due to multiple stages of processing in U.S. food systems, the CPI typically lags movements in the PPI. Examining the PPI is thus a useful tool in understanding what may happen to the CPI in the near future.

ERS does not currently forecast industry-level PPIs for unprocessed, processed, and finished foods and feeds, but these have historically shown a strong correlation with the all-food and food-at-home CPIs. Prices for unprocessed foods and feeds rose 0.3 percent, prices for processed foods and feeds increased 0.1 percent, and prices for finished consumer foods were up 0.9 percent from February to March 2019. Price changes at these earlier stages of production could be indicative of future trends at the retail level. 

In March, cattle prices increased 2.8 percent since February but were down 2.3 percent since this time last year. The price forecast for farm-level cattle has not been adjusted this month—prices are expected to increase 2.5 to 3.5 percent in 2019. Wholesale beef prices also increased in March, rising 3.7 percent, and are up 0.7 percent from the previous year. Wholesale beef prices increased 1.7 percent in 2018 and are now expected to remain relatively constant, changing between -0.5 to 0.5 percent in 2019.

Prices for farm-level milk increased 4.5 percent from February to March and are up 2.4 percent from March 2018. Wholesale dairy prices also rose last month, increasing 0.7 percent from February to March, and are 3.5 percent higher than they were this time last year. Farm milk prices fell 10.6 percent in 2018 and are expected to decline 1.0 to 0.0 percent in 2019. Wholesale dairy prices declined 2.3 percent in 2018 and are forecast to increase between 0.25 to 1.25 percent in 2019.

Farm-level soybean prices decreased 2.6 percent from February to March and remain 16.3 percent lower than the same time last year. Wholesale fats and oils prices increased slightly over the month by 0.3 percent in March, but prices are 6.2 percent lower than March 2018 price levels. Farm-level soybean prices decreased 4.8 percent in 2018 but are expected to increase 0.0 to 1.0 percent in 2019. Prices for wholesale fats and oils decreased 2.5 percent in 2018 and are expected to decline 4.5 to 3.5 percent in 2019.

Farm-level vegetable prices increased in March, rising 17.6 percent, with prices 18.1 percent higher than they were this time last year. Farm-level vegetable prices decreased 1.7 percent in 2018 but are expected to increase 5.0 to 6.0 percent in 2019.

Farm-level wheat prices fell 8.4 percent from February to March and are 8.4 percent lower than they were in March 2018. Farm-level wheat prices increased 14.2 percent in 2018 but are expected to remain the same or decrease -1.0 to 0.0 percent in 2019. 

See Changes in Producer Price Indexes, 2017 through 2019.