Food Price Outlook, 2020
This page summarizes the November 2020 forecasts, which incorporate the October 2020 Consumer Price Index and Producer Price Index numbers.
See Changes in Food Price Indexes, 2018 through 2021 for data files.
The all-items Consumer Price Index (CPI), a measure of economy-wide inflation, increased by 0.04 percent from September 2020 to October 2020 before seasonal adjustment, up 1.2 percent from its October 2019 level. The CPI for all food increased 0.2 percent from September 2020 to October 2020, and food prices were 3.9 percent higher than the October 2019 level.
The amount 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 October and was 3.9 percent higher than October 2019; and
- The food-at-home (grocery store or supermarket food items) CPI increased 0.2 percent from September to October 2020 and was 4.0 percent higher than October 2019.
In 2020 thus far, compared to 2019 (reported as "Year-to-date avg. 2019 to avg. 2020"), food-at-home prices have increased 3.4 percent and food-away-from-home prices have increased 3.0 percent. The CPI for all food increased an average of 3.3 percent over this same period. Of all the CPI food categories USDA's Economic Research Service tracks, the category of beef and veal has had the greatest relative price increase (10.0 percent); fresh fruits have had the largest relative price decrease (1.0 percent).
Many prices have been relatively slow to retreat from the highs reached due to the pandemic, so some forecasts have been revised upward this month. In 2020, food-at-home prices are expected to increase between 3.0 and 4.0 percent, and food-away-from-home prices are expected to increase between 2.5 and 3.5 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 2.0 and 3.0 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. These differences are partly caused by differences between the cost structure of restaurants and those of supermarkets and grocery stores.
In 2018, retail food-at-home prices rose 0.4 percent. This price increase was the first 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 had the greatest annual average increase of 10.8 percent in 2018.
In 2019, retail food-at-home prices rose 0.9 percent. This price increase was the second in 4 years, but the rate was still below the 20-year historical 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 had the largest annual average decrease of 10.0 percent.
CPI Forecast Changes This Month
Forecast ranges for 10 of the 22 CPI categories for 2020 have been revised upward this month. Forecasts for all categories remained unchanged for 2021.
Forecast price ranges for poultry, other meats, fresh vegetables, dairy products, and the category of beef and veal have been revised upward this month. These categories are combined to form additional, overall categories, for which forecasts have also been revised upward. These categories include meats, fresh fruits and vegetables, fruits and vegetables (which includes processed and fresh), and food-at-home. The price of fresh vegetables increased 1.1 percent from September to October 2020, rendering the price of fresh vegetables 4.2 percent higher than in October of 2019. The price spike from September to October was primarily driven by a 7.2-percent increase in the price of fresh lettuce over the same period. The index price of fresh vegetables is now predicted to increase between 2.0 and 3.0 percent in 2020. The price increase in vegetables is predicted to drive an increase in the category of fresh fruits and vegetables between 0.5 and 1.5 percent in 2020, despite price decreases in fresh fruit.
Meat prices have been slow to decline following the highs reached at the onset of COVID-19. Some categories of meat have continued to see monthly declines in prices (e.g., beef and veal prices decreased 1.4 percent from August to September and another 0.3 percent from September to October). In contrast, other meat categories have had both decreases and increases in price (e.g., pork prices decreased 1.4 percent from August to September but increased 0.9 percent from September to October). Prices for poultry, other meats, and the category of beef and veal have been especially slow to decline from the highs reached this spring; thus, forecasts for each of these categories have been revised upward. As an overall category, meat is now predicted to increase in price between 7.0 and 8.0 percent in 2020.
The forecast for food-away-from-home has been revised upward this month. Food-away-from-home prices have been steadily increasing since even before the start of the pandemic. They are currently 3.0 percent higher, on average, this year than they were in 2019. The current inflation rate for food-away-from-home is slightly higher than its historical 20-year average rate of inflation (2.8 percent).
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 retail price changes, the PPI measures the average change in prices paid to domestic producers for their outputs. The PPI collects data 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 U.S. food systems, 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, 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.