Summary Findings

Food Price Outlook, 2020

This page summarizes the August 2020 forecasts, which incorporate the July 2020 CPI and PPI numbers. 

See Changes in Food Price Indexes, 2018 through 2021 for data files.

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

The all-items Consumer Price Index (CPI), a measure of economy-wide inflation, increased by 0.5 percent from June 2020 to July 2020 before seasonal adjustment, up 1.0 percent from its July 2019 level. The CPI for all food was down 0.3 percent between June 2020 and July 2020, and food prices were 4.1 percent higher than the July 2019 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 0.5 percent in July and was 3.4 percent higher than July 2019; and
  • The food-at-home (grocery store or supermarket food items) CPI decreased 1.0 percent from June to July 2020 and was 4.6 percent higher than last July.

In 2020 so far compared to 2019 (reported as "Year-to-date avg. 2019 to avg. 2020"), food-at-home prices have increased 3.1 percent and food-away-from-home prices have increased 2.4 percent. The CPI for all food has increased an average of 2.8 percent. Of all the CPI food categories that USDA’s Economic Research Service tracks, the category of beef and veal has had the largest relative price increase (10.6 percent); fresh fruits have had the largest relative price decrease (1.5 percent).

In 2020, food-at-home prices are still expected to increase between 2.5 and 3.5 percent and food-away-from-home prices are still expected to increase between 1.5 and 2.5 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 1.5 and 2.5 percent.

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. These differences are partly caused by variations in the cost structure of restaurants versus those of supermarkets and grocery stores. 

In 2018, retail food-at-home 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 percent. While prices for pork, other meats, dairy products, and processed fruits and vegetables declined in 2018, prices for all other food categories increased. Eggs had the largest annual average increase of 10.8 percent in 2018.

In 2019, retail food-at-home prices rose 0.9 percent. This was the second increase in 4 years, but the rate was still below the 20-year historical annual average of 2 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 had the largest annual average decrease of 10 percent.

CPI Forecast Changes This Month

Forecasts for all CPI categories except eggs and fats and oils remain unchanged from the July forecast for 2020. Forecasts for all CPI categories for 2021 are also unchanged.

Eggs are now predicted to increase in price from 7.0 to 8.0 percent in 2020– down from the 8.0 to 9.0 percent prediction in July. Egg prices reached a high in April 2020, but have been trending downward in the months since.

Fats and oils are now predicted to increase in price from 0.0 to 1.0 percent in 2020—up from the range of -0.5 to 0.5 percent forecast in July. Fats and oils prices bucked the trend of inflation for 2019—on average, decreasing 0.7 percent for the year—but they have been gradually increasing in 2020.

Overall, food prices declined in July. Of the 22 CPI categories, 15 decreased in price from June 2020 to July 2020. Meat prices in particular fell in July 2020 for the first time since January 2020, with an 8.2-percent price decrease in beef and veal from June to July 2020, a 2.2-percent price decrease in pork from June to July 2020, and a 2.1-percent price decrease in poultry from June to July 2020. These decreases align with the rebound in processing capacity after disruptions from COVID-19. Prices are expected to continue to retreat from the highs reached as a result of the pandemic during 2020 and converge closer to historical trends over the course of 2021.

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 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 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 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. Because of 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 soon happen to the CPI.

The Economic Research Service does not 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.

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.

Last updated: Tuesday, August 25, 2020

For more information, contact: Carolyn Chelius