Food Price Outlook, 2021
This page summarizes the September 2021 forecasts, which incorporate the August 2021 Consumer Price Index and Producer Price Index numbers.
See Changes in Food Price Indexes, 2019 through 2022 for data files.
The all-items Consumer Price Index (CPI), a measure of economy-wide inflation, increased by 0.2 percent from July 2021 to August 2021 before seasonal adjustment, up 5.3 percent from August 2020. The CPI for all food increased 0.4 percent from July 2021 to August 2021, and food prices were 3.7 percent higher than in August 2020.
The level 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 August 2021 and was 4.7 percent higher than August 2020; and
- The food-at-home (grocery store or supermarket food purchases) CPI increased 0.3 percent from July 2021 to August 2021 and was 3.0 percent higher than August 2020.
In 2021 thus far compared to 2020 (reported as "Year-to-date avg. 2020 to avg. 2021"), food-at-home prices have increased 2.1 percent and food-away-from-home prices have increased 3.3 percent. The CPI for all food has increased an average of 2.7 percent. Of all the CPI food-at-home categories tracked by the U.S. Department of Agriculture (USDA) Economic Research Service, pork has had the largest relative price increase (5.4 percent) and fresh vegetables the smallest (0.5 percent). No food categories have decreased in price in 2021 compared to 2020.
In 2021, food-at-home prices are expected to increase between 2.5 and 3.5 percent, and food-away-from-home prices are expected to increase between 3.5 and 4.5 percent. In 2022, food-at-home prices are expected to increase between 1.5 and 2.5 percent, and food-away-from-home prices are expected to increase between 3.0 and 4.0 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 since then. The divergence is partly due to differences between the costs of serving prepared food at restaurants and retailing food in supermarkets and grocery stores.
In 2019, retail food-at-home prices rose 0.9 percent. This increase was the second in 4 years, but the rate was still below the 20-year annual average of 2.0 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 the largest annual average decrease of 10.0 percent.
In 2020, food-at-home prices increased 3.5 percent and food-away-from-home prices 3.4 percent. This convergence was largely driven by a rapid increase in food-at-home prices, while food-away-from-home price inflation remained within 0.2 percentage points of the 2019 inflation rate. The largest price increases were for meat categories: beef and veal prices increased by 9.6 percent, pork prices by 6.3 percent, and poultry prices by 5.6 percent. The only category to decrease in price in 2020 was fresh fruits by 0.8 percent.
CPI Forecast Changes This Month
Forecast ranges for 4 protein CPI food categories were revised upward this month: beef and veal, pork, fish and seafood, and eggs. Forecast ranges for the aggregate categories of meats; and meats, poultry, and fish were revised upward as well. The forecast range for fresh fruits was revised downward this month.
Beef and veal prices increased 0.6 percent from July to August 2021, and pork prices increased 0.7 percent. These increases follow 6 months of consecutive price increases for both categories. Prices have been driven up by strong domestic and international demand, high feed costs, and supply chain disruptions. Winter storms and drought impacted meat prices this spring, and processing facility closures due to cybersecurity attacks impacted beef and other meat production in May. Beef and veal prices are predicted to increase between 5.0 and 6.0 percent in 2021, and pork prices are predicted to increase between 6.0 and 7.0 percent. Prices for the aggregate category of “meats” are predicted to increase between 4.5 and 5.5 percent.
Fish and seafood prices decreased slightly, by 0.1 percent, from July to August 2021. However, prices are still 3.6 percent higher, on average in 2021 than in 2020. Prices are high due to low imports, labor shortages, and strong domestic demand, particularly within the foodservice sector. Fish and seafood prices are predicted to increase between 3.5 and 4.5 percent in 2021. Prices for the aggregate category of “meats, poultry, and fish” are predicted to increase between 4.0 and 5.0 percent.
Egg prices increased 1.6 percent from July to August 2021, and are 2.8 percent higher, on average, in 2021 compared to 2020. Egg prices are high in part due to elevated foreign demand, especially from South Korea, where avian influenza impacted the egg supply earlier this year. U.S. egg prices are predicted to increase 2.5 to 3.5 percent in 2021.
Producer Price Index (PPI) for Food (not seasonally adjusted)
A Producer Price Index (PPI) resembles a CPI in that it reflects price changes over time. However, instead of retail prices, a PPI provides a measure of the average prices paid to domestic producers for their output. PPIs are reported for nearly every industry in the goods-producing sector of the economy. Three major PPI commodity groups are of interest to food markets: 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 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 the downstream CPIs. Price volatility decreases as products move from the farm to the wholesale sector to the retail sector. Because of multiple processing stages in the U.S. food system, the CPI typically lags movements in the PPI. The PPI is thus a useful tool for understanding what may soon happen to the CPI.
The USDA Economic Research Service does not forecast industry-level PPIs for unprocessed, processed, and finished foods and feeds. However, these prices have historically shown a strong correlation with the all-food and food-at-home CPIs.
PPI Forecast Changes This Month
PPI forecasts for wholesale beef, farm-level eggs, farm-level wheat, and wholesale wheat flour were revised upward this month. Forecasts for wholesale pork and poultry, and farm-level soybeans and fruit were revised downward.
Wholesale beef prices increased 14.2 percent from July to August 2021. High feed costs, increased demand, and changes in the supply chain have driven up prices for wholesale beef. Wholesale beef prices are predicted to increase between 17.0 and 20.0 percent in 2021. Wholesale pork and poultry prices, however, experienced only slight increases from July to August — 2.9 and 2.7 percent, respectively — and these slight increases follow price decreases from June to July for both categories. Given the slowing of price increases, forecasts have been adjusted downward: wholesale pork prices are now predicted to increase between 17.0 and 20.0 percent — an adjustment downward from 18.0 to 21.0 percent — and wholesale poultry prices are predicted to increase between 16.0 and 19.0 percent — an adjustment downward from 19.0 to 22.0 percent.
Farm-level wheat prices and wholesale wheat flour prices both increased from July to August 2021, by 14.3 and 7.6 percent, respectively. As a result, forecasts have been adjusted upward: farm-level wheat prices are predicted to increase between 33.0 and 36.0 percent in 2021; wholesale wheat flour prices are predicted to increase between 15.0 and 18.0 percent.
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 USDA 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, 2019 through 2022 for data files.