Summary Findings

Food Price Outlook, 2020

This page provides a summary of the February 2020 forecasts which incorporate the January 2020 CPI and PPI numbers.

See Changes in Food Price Indexes, 2017 through 2020 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, was down 0.4 percent from December 2019 to January 2020 and was 2.5 percent above the January 2019 level. The CPI for all food was up 0.5 percent between December 2019 and January 2020, and food prices were 1.8 percent higher than the January 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 0.4 percent in January and was 3.1 percent higher than January 2019; and
• The food-at-home (grocery store or supermarket food items) CPI increased 0.6 percent from December to January and was 0.7 percent higher than last January.

Looking back at 2019 overall, food-at-home prices increased 0.9 percent and food-away-from home increased 3.1 percent. The CPI for all food increased an average of 1.9 percent. Of all the CPI food categories ERS tracks, fresh vegetables saw the largest relative price increase, of 3.8 percent, and eggs had the largest relative price decrease, of 10.0 percent. In general, food-at-home prices saw low inflation with four CPI categories decreasing on average (poultry, eggs, fats and oils, and fresh fruits). Incorporating the 2019 price changes in the rolling 20-year historical average, nine CPI categories have decreased their 20-year averages (beef and veal, fish and seafood, eggs, dairy products, fats and oils, fruits and vegetables, fresh fruits and vegetables, fresh fruits, and other foods). Four CPI categories saw their 20-year historical averages increase (food away from home, pork, fresh vegetables, and sugars and sweets).

The 2020 CPI forecast indicates 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, fresh fruits, and processed fruits and vegetables could see lower prices. Many categories are expected to see price increases in 2020 below the 20-year historical average, including the aggregate category of food at home, and the disaggregate categories of beef and veal, other meats, poultry, fish and seafood, fresh vegetables, sugars and sweets, nonalcoholic beverages, and other foods. Pork, dairy products, and cereals 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 increase in a range between 2.0 and 3.0 percent 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, the rates of food-at-home and food-away-from-home price growth have 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 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 food categories increased. Eggs saw the largest annual average increase, of 10.8 percent in 2018.

CPI forecast changes this month
The 2020 forecast for fresh fruits has been adjusted downward after four consecutive monthly index declines. The fresh fruits CPI decreased 0.2 percent from December 2019 to January 2020 and was down 4.3 percent since January 2019. The 2020 fresh fruit CPI is expected to change in a range between -0.5 and 0.5 percent.

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 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. 

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.

See Changes in Food Price Indexes, 2017 through 2020 for data files.