Food Price Outlook, 2019
This page provides the May 2019 forecasts which incorporate the April 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 0.5 percent from March to April 2019 and is 2.0 percent above the April 2018 level. The CPI for all food did not change between March and April 2019, but food prices were 1.8 percent higher than the April 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 0.3 percent in April and is 3.1 percent higher than April 2018; and
- The food-at-home (grocery store or supermarket food items) CPI decreased 0.3 percent from March to April and is 0.7 percent higher than last April.
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 between 2017 and 2018, prices for all other major food categories increased. Eggs saw the largest annual average increase of 10.8 percent between 2017 and 2018.
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 (2015-16), 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 grocery stores and supermarkets. Food-at-home prices are expected to increase in a range 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, fresh fruits, 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 increase in a range 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.
Pork retail prices declined 0.5 percent from March to April 2019, and prices were 0.4 percent lower than last April. So far in 2019, pork prices are 0.8 percent lower year-to-date than in 2018 due to strong domestic supplies exerting downward pressure on prices. However, recent hog production losses in China resulting from African Swine Fever (ASF) are expected to introduce a countervailing increase in prices in the second half of 2019. The 2019 forecast for retail pork prices calls for a decrease in prices as in 2018 where prices decreased by 0.4 percent. For this month, the forecast has been revised upward, and retail pork prices are expected to decrease in a range between 1.0 and 2.0 percent.
Retail egg prices continued to fall, with a 3.5-percent decline from March to April and a 16.4-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 in a range between 4.0 and 5.0 percent in 2019.
Fresh fruit prices increased 0.3 percent from March to April but are down 0.3 percent from April 2018. Citrus prices are down from last month by 1.6 percent and down year-over-year by 2.0 percent, due, in part, to a rebound in U.S. supplies from the 2018/2019 crop. Conversely, tighter domestic supplies for apples boosted prices by 1.3 percent since last April. A winding down of grape supplies imported from the Southern Hemisphere (mainly from Chile) has also boosted April grape prices, which fall under "other fresh fruits." In aggregate, other fresh fruit prices are up 2.1 percent since last month and up 0.8 percent since April 2018. The 2019 fresh fruit price forecast has been revised downward slightly from the 2018 forecast of a 1.0-percent increase, with 2019 prices expected to increase in a range between 0.5 and 1.5 percent in 2019.
Fresh vegetable prices decreased 1.4 percent from March to April but are 6.4 percent higher than in April 2018. The price indexes for all fresh vegetable components (potatoes, lettuce, tomatoes, and other fresh vegetables) decreased slightly from March to April but were up year-over-year. Prices for potatoes were up 6.0 percent, lettuce up 15.9 percent, tomatoes up 1.0 percent, and other fresh vegetables up 6.1 percent. The price increase for lettuce is the result of a reduced supply following the E. coli outbreak late in 2018. Following a 1.1-percent increase in 2018, fresh vegetable prices are expected to increase in a range between 2.0 and 3.0 percent in 2019.
Processed fruit and vegetable prices decreased 1.0 percent from March to April but increased 0.2 percent since April 2018. Canned fruits and vegetables carry the largest weight among processed fruits and vegetables; canned fruits increased 1.9 percent and canned vegetables increased 3.5 percent year-over-year. For 2019, processed fruits and vegetables prices have been revised upwards, following a 0.6-percent decrease in 2018, and are expected to remain relatively stable, changing in a range between -0.5 and 0.5 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 rose 3.0 percent, prices for processed foods and feeds increased 0.8 percent, and prices for finished consumer foods were down 0.3 percent from March to April 2019. Price changes at these earlier stages of production could be indicative of future trends at the retail level.
Changes to Food Category PPI Forecasts
Farm-level cattle prices decreased 2.3 percent since March 2019 but were up 2.1 percent since this time last year. While cattle prices decreased 3.6 percent in 2018, prices are expected to increase in 2019. The forecast for 2019 cattle prices has been revised upward and is expected to increase in a range between 3.5 and 4.5 percent.
Wholesale beef prices increased in April, rising 2.7 percent, and are up 6.3 percent from the previous year. Wholesale beef prices increased 1.7 percent in 2018, and the 2019 forecast has been revised upward to increase in a range between 0.5 and 1.5 percent.
Farm-level egg prices decreased 8.9 percent since March and 51.6 percent since this time last year. While prices increased 33.2 percent in 2018, farm-level egg prices have been revised downward this month and are expected to decrease in a range between 32.0 and 33.0 percent in 2019.
Wholesale dairy prices rose last month, increasing 0.9 percent from March to April, with a year-over-year increase of 4.1 percent. Following a 2.3-percent decline for wholesale dairy prices in 2018, the 2019 forecast has been revised upward and is expected to increase in a range between 1.5 and 2.5 percent.
Farm-level soybean prices increased 0.7 percent from March to April but decreased 16.6 percent year-over-year. Farm-level soybean prices decreased 4.8 percent in 2018, and the 2019 forecast has been revised downward, with prices expected to decrease in a range between 4.0 and 5.0 percent.
Farm-level fruit prices decreased 5.3 percent in April and 6.5 percent since this time last year. After a decrease of 1.9-percent in 2018, the forecast for farm-level fruit prices in 2019 has been revised downward, with farm-level fruit prices now expected to decrease in a range between 3.0 and 4.0 percent.
Farm-level vegetable prices decreased by 11.6 percent in April but were up 27.0 percent since the same time last year. Farm-level vegetable prices decreased 1.7 percent in 2018, but the forecast has been revised upward, with prices expected to increase in a range between 9.0 and 10.0 percent in 2019.
Farm-level wheat prices decreased 2.4 percent from March to April and are 12.5 percent lower than they were in April 2018. Farm-level wheat prices increased 14.2 percent in 2018, but the forecast for 2019 has been revised downward. Farm-level wheat prices are expected to decrease in a range between 4.0 and 5.0 percent in 2019.