Food Price Outlook, 2021
This page summarizes the July 2021 forecasts, which incorporate the June 2021 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 0.9 percent from May 2021 to June 2021 before seasonal adjustment, up 5.4 percent from June 2020. The CPI for all food increased 0.7 percent from May 2021 to June 2021, and food prices were 2.4 percent higher than in June 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 0.7 percent in June 2021 and was 4.2 percent higher than in June 2020; and
- The food-at-home (grocery store or supermarket food purchases) CPI increased 0.7 percent from May 2021 to June 2021 and was 0.9 percent higher than in June 2020.
In 2021 thus far compared to 2020 (reported as "year-to-date avg. 2020 to avg. 2021"), food-at-home prices have increased 1.6 percent and food-away-from-home prices 2.8 percent. The CPI for all food has increased an average of 2.1 percent. Of all the CPI food-at-home categories tracked by the U.S. Department of Agriculture (USDA) Economic Research Service, the fresh fruits category has had the largest relative price increase (5.0 percent) and the fresh vegetables category the smallest (0.4 percent). No 2021 price categories decreased compared to 2020 prices.
In 2021, food-at-home prices are expected to increase between 2.0 and 3.0 percent, and food-away-from-home prices are expected to increase between 3.0 and 4.0 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 foods 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 nine of the 22 CPI food categories were revised upward this month. Forecast ranges for beef and veal, pork, poultry, fish and seafood, eggs, and fresh fruits, as well as the aggregate categories of fresh fruits and vegetables, meats, and meats, poultry, and fish, were revised upward.
Beef and veal prices increased 5.3 percent from May to June 2021; pork prices increased 4.0 percent; and poultry prices increased 0.9 percent. These increases follow 4 months of consecutive price increases for all three 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 now predicted to increase between 3.0 and 4.0 percent in 2021. Pork prices are predicted to increase between 4.0 and 5.0 percent; poultry prices are predicted to increase between 2.5 and 3.5 percent. Prices for the aggregate category of “meats” are predicted to increase between 3.0 and 4.0 percent.
Fish and seafood prices also increased from May to June 2021, by 1.6 percent. Prices increased due to low imports and strong domestic demand, particularly within the foodservice sector. Fish and seafood prices are now predicted to increase between 2.0 and 3.0 percent. Prices for the aggregate category of “meats, poultry, and fish” are predicted to increase between 2.5 to 3.5 percent.
Fresh fruit prices decreased 0.9 percent from May to June 2021; however, prices are still 5.0 percent higher on average in 2021 than in 2020. Among the fresh fruit subcategories, citrus prices had the largest relative price increase of 3.0 percent between May and June 2021, followed by apples at 2.5 percent. Fresh fruit prices are now predicted to increase between 5.0 and 6.0 percent in 2021. Prices for the aggregate category of “fresh fruits and vegetables” are predicted to increase between 2.5 and 3.5 percent.
In addition to factors influencing prices for specific food categories, economy-wide inflation is also high and is contributing to overall price increases. The CPI for “all-items,” which encompasses food, housing, transportation, and other categories, has increased 2.9 percent so far in 2021 compared to 2020. For context, annual all-items inflation has averaged 2.0 percent over the past 20 years. Inflation in 2021 is already nearly 50 percent higher than average annual inflation only halfway through the year. Above-average inflation is expected to continue through 2022.
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 output. 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 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 farm-level cattle, wholesale beef, pork, poultry, and dairy were revised upward this month. Forecasts for farm-level vegetables and wheat were revised downward.
High feed costs, reduced forage for livestock due to drought, increased demand, and changes in the supply chain have driven up prices for livestock wholesale meats, poultry, and dairy. Cattle prices are now expected to increase between 8.0 and 11.0 percent; wholesale beef prices are predicted to increase between 13.0 and 16.0 percent; wholesale pork prices are predicted to increase between 19.0 and 22.0 percent; and wholesale poultry prices are predicted to increase between 20.0 and 23.0 percent. Wholesale dairy prices are predicted to decrease up to -1.0 or increase up to 2.0 percent —an adjustment upward from a -2.5 to 0.5-percent forecast range.
Farm-level vegetable prices increased 1.6 percent from May to June 2021 but remain 18.2 percent lower, on average, in 2021 compared to 2020. Farm-level vegetable prices are now predicted to decrease between 18.0 and 15.0 percent in 2021.
Wheat prices decreased 9.1 percent from May to June 2021—a diversion from the increases in prior months. Farm-level wheat prices are now predicted to increase between 30.0 and 33.0 percent in 2021—an adjustment downward from an increase of 35.0 to 38.0 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, 2018 through 2021 for data files.