Food Price Outlook, 2019-2020
This page provides the November 2019 forecasts which incorporate the October 2019 CPI and PPI numbers.
- Consumer Price Index (CPI) for Food (not seasonally adjusted)
- Producer Price Index (PPI) for Food (not seasonally adjusted)
The all-items Consumer Price Index (CPI), a measure of economy-wide inflation, was up 0.2 percent from September to October 2019 and is 1.8 percent above the October 2018 level. The CPI for all food was up 0.3 percent between September and October 2019, and food prices were 2.1 percent higher than the October 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 October and is 3.3 percent higher than October 2018; and
- The food-at-home (grocery store or supermarket food items) CPI increased 0.3 percent from September to October and is 1.0 percent higher than last October.
In 2019, price growth may continue to remain low at grocery stores and supermarkets. Food-at-home prices are expected to increase in a range between 0.5 and 1.5 percent in 2019, 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 poultry, eggs, fats and oils, and fresh fruits. Beef and veal, other meats, fish and seafood, processed fruits and vegetables, and other foods are all expected to increase but at rates lower than their 20-year historical averages. Fresh vegetables are expected to increase at rates greater than the 20-year historical average.
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 increase in a range between 2.0 and 3.0 percent in 2019.
The 2020 CPI forecasts indicate a continuation of low inflation at grocery stores and supermarkets. In 2020, food-at-home prices are expected to increase in a range between 0.5 and 1.5 percent, as potentially the fifth year in a row with deflating or lower-than-average inflating retail food prices. Fats and oils and processed fruits and vegetables could see lower prices. Many products are expected to see price increases in 2020 below the 20-year historical average, including beef and veal, other meats, poultry, fish and seafood, fresh vegetables, sugars and sweets, nonalcoholic beverages, and other foods. Pork, dairy products, fresh fruits, and cereal and bakery products are expected to increase in a price range near the 20-year historical average in 2020. Food-away-from-home prices are expected to continue growing at a consistent rate and to increase in a range between 2.0 and 3.0 percent again in 2020.
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, food-at-home and food-away-from-home price growth has diverged. While food-at-home prices deflated in 2016 and 2017, food-away-from-home 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.
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 2.0 percent. While prices for pork, other meats, dairy products, and processed fruits and vegetables declined in 2018, prices for all other major food categories increased. Eggs saw the largest annual average increase of 10.8 percent in 2018.
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. 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.
Prices for the aggregate category of meats (comprising beef and veal, pork, and other meats: lunchmeats, frankfurters, lamb, mutton, and organ meats) increased 0.4 percent from September to October and were up 2.5 percent since last October. Year-to-date, the aggregate meats CPI has increased 1.1 percent over 2018. The forecast for meats has been adjusted upward this month following upward adjustments for both the pork and other meat components. Meat prices in 2019 are expected to increase in a range between 0.5 and 1.5 percent.
Pork prices were up 0.4 percent in October and have increased 3.1 percent since October of 2018. Prices have been slowly increasing as the market adjusts to the emergence of African Swine Fever in China, but year-to-date, retail pork prices have increased just 1.1 percent over 2018 prices—still below the 20-year historical average of 1.8 percent. It is key to remember that early 2019 retail pork prices were quite low due to strong domestic production. The forecast for pork has been adjusted upward slightly this month in response to the slow continued upward price trend. Pork prices in 2019 are expected to increase in a range between 1.0 and 2.0 percent. The 2020 forecast remains unchanged with prices expected to strengthen the trend upward and increase in a range between 1.5 and 2.5 percent.
Prices for other meats (comprising lunchmeats, frankfurters, lamb, mutton, and organ meats) were up 0.9 percent from September to October 2019 and were up 1.7 percent since October 2018. Year-to-date, other meats prices have gone up 0.7 percent over 2018 prices. The forecast has been adjusted upward the month with 2019 other meat prices expected to increase in a range between 0.0 and 1.0 percent.
Egg prices continue their decline as they decreased 2.2 percent in October and were down 8.7 percent since October of 2018 due to large supplies. Year-to-date, egg prices have declined 10.3 percent lower than 2018. The forecast has been adjusted downward this month with 2019 egg prices expected to decrease in a range between 10.0 and 11.0 percent.
Fresh fruit prices were up 2.4 percent from September to October but have decreased 0.8 percent since October 2018. Year-to-date, fresh fruit prices have gone down 1.1 percent since 2018. Given that historically fresh fruit prices do not tend to increase month-to-month in the last two months of the year, the forecast has been adjusted downward this month. Fresh fruit prices in 2019 are expected to decrease in a range between 0.5 and 1.5 percent.
Processed fruits and vegetables prices decreased 0.1 percent in October but were up 1.4 percent since October 2018. Year-to-date, prices have increased 1.3 percent. The forecast has been adjusted upward this month with processed fruits and vegetables prices in 2019 expected to increase in a range between 0.5 and 1.5 percent.
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 decreased 4.3 percent, prices for processed foods and feeds decreased 0.1 percent, and prices for finished consumer foods were down 0.1 percent from August to September 2019. Price changes at these earlier stages of production could be indicative of future trends at the retail level.
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 ERS Outlook publications including Livestock, Dairy, and Poultry, Oil Crops, Wheat, Fruit and Tree Nuts, and Vegetables and Pulses.
Changes to Food Category PPI Forecasts
To enhance the accurate communication of information in the Food Price Outlook, the PPI forecasts this month reflect an innovation which will be the new standard moving forward. The PPI ‘Forecast Range’ will now be reported as a three-percent range instead of a one-percent range. This change reflects the fact that PPI are much more volatile and have greater variance than CPI.
The change is being implemented this month since none of the PPI forecasts are being adjusted upward or downward. Thus, the midpoint estimates of the new ranges are the same as last month.