Food Price Outlook, 2021
This page summarizes the December 2021 forecasts, which incorporate the November 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 0.5 percent from October 2021 to November 2021 before seasonal adjustment, up 6.8 percent from November 2020. The CPI for all food increased 0.5 percent from October 2021 to November 2021, and food prices were 6.1 percent higher than in November 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 0.6 percent in November 2021 and was 5.8 percent higher than November 2020; and
- The food-at-home (grocery store or supermarket food purchases) CPI increased 0.3 percent from October 2021 to November 2021 and was 6.4 percent higher than November 2020.
In 2021 thus far compared with 2020 (reported as "Year-to-date avg. 2020 to avg. 2021"), food-at-home prices have increased 3.1 percent and food-away-from-home prices have increased 4.2 percent. The CPI for all food has increased an average of 3.6 percent. Of all the CPI food-at-home categories tracked by the U.S. Department of Agriculture (USDA), Economic Research Service (ERS), the beef and veal category has had the largest relative price increase (8.7 percent) and the fresh vegetables category the smallest (0.9 percent). No food categories have decreased in price in 2021 compared with 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 4.0 and 5.0 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 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
Only forecast ranges for protein categories were revised in December 2021. Forecast ranges for beef and veal, pork, poultry, and fish and seafood were all revised upward this month. Forecast ranges for the aggregate categories of meats and meats, poultry, and fish were revised upward as well.
Most meat, poultry, and fish categories tracked by ERS increased in price from October to November 2021: beef and veal prices increased 0.6 percent, pork prices 0.6 percent, other meat prices 1.2 percent, poultry prices 0.8 percent, and fish and seafood prices 1.0 percent. Prices have been driven up by strong domestic and international demand, labor shortages, supply chain disruptions, and high feed and other input costs. Concentration and capacity constraints within the meat industry could also affect prices. Beef and veal prices are predicted to increase between 9.0 and 10.0 percent in 2021, pork prices are predicted to increase between 8.0 and 9.0 percent, poultry prices are predicted to increase between 4.5 and 5.5 percent, and fish and seafood prices are predicted to increase between 4.5 and 5.5 percent. Prices for the aggregate category of “meats” are predicted to increase between 7.0 and 8.0 percent. Prices for the aggregate category of “meats, poultry, and fish” are predicted to increase between 6.0 and 7.0 percent.
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 farm-level eggs, wholesale fats and oils, farm-level fruits, farm-level vegetables, and farm-level wheat were revised upward this month. Forecasts for farm-level soybeans were revised downward.
Farm-level soybean prices did not change between October and November 2021, which deviated from the large decreases observed in previous months. Higher-than-expected soybean stocks led to a 6.7-percent price decrease for farm-level soybeans from September to October 2021, which followed 3.7-percent and 8.0-percent price decreases in August and September, respectively. Farm-level soybean prices are predicted to increase between 47.0 and 50.0 percent in 2021—an adjustment downward from the 48.0 to 51.0 percent predicted last month. Despite decreasing soybean prices, wholesale fats and oils prices increased 1.8 percent from October to November 2021. Wholesale fats and oils prices are now predicted to increase between 37.0 and 40.0 percent in 2021.
Prices for farm-level fruits and farm-level vegetable prices increased 20.1 and 11.5 percent, respectively from October to November 2021. Farm-level fruit prices are predicted to increase between 3.0 and 6.0 percent in 2021 and farm-level vegetable prices are predicted to decrease between 6.0 and 9.0 percent.
Farm-level wheat prices increased from October to November 2021 by 6.6 percent, following a 2.9 percent increase the previous month. As a result, forecasts have been adjusted upward: farm-level wheat prices are predicted to increase between 41.0 and 44.0 percent in 2021.
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.