Summary Findings

Food Price Outlook, 2018-19

This page provides the following information for September 2018:

Consumer Price Index (CPI) for Food (not seasonally adjusted)

The all-items Consumer Price Index (CPI), a measure of economy-wide inflation, was up 0.1 percent from August to September 2018 and is 2.3 percent above the September 2017 level. The CPI for all food also rose 0.1 percent from August to September, and food prices were 1.4 percent higher than the September 2017 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 rose 0.2 percent in September and is 2.6 percent higher than September 2017; and
  • The food-at-home (grocery store or supermarket food items) CPI was unchanged from August to September, but is 0.4 percent higher than last September.

Between the 1970s and early 2000s, food-at-home prices and food-away-from-home prices increased at similar rates. Since 2009, however, food-at-home and food-away-from-home price growth has diverged. While grocery prices have deflated in recent years, restaurant 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 being served. For this reason, decreasing farm-level and wholesale food prices, which have exerted downward pressure on food-at-home prices, have had less of an impact on restaurant menu prices.

ERS revises its food price forecasts if the conditions (such as the feed grain crop outlook or weather-related crop conditions) on which they are based change significantly.

In 2018, retail food prices are expected to rise between 0.0 to 1.0 percent, which is still below the 20-year historical average of 2.1 percent. While fats and oils, pork, nonalcoholic beverages, dairy, and processed fruits and vegetables could potentially decline in price, prices for beef and veal, poultry, fish and seafood, eggs, and fresh fruits and vegetables are expected to increase. Due to deflation in 2016 and 2017, expected price increases would still leave overall price levels in 2018 lower than in 2015. These forecasts are based on an assumption of normal weather conditions throughout the remainder of the year; however, severe weather or other unforeseen events could potentially drive up food prices beyond the current forecasts.

Looking ahead to 2019, price growth may continue to remain low at the grocery store. Retail food-at-home prices are expected rise between 1.0 and 2.0 percent, as potentially the fourth year in a row with deflating or lower-than-average inflating retail food prices. Several products may continue to see lower prices, including pork, other meats, fats and oils, processed fruits and vegetables, and nonalcoholic beverages. Beef and veal, poultry, fish and seafood, sugars and sweets, and other foods are all expected to increase but at rates lower than their 20-year historical averages. In addition to commodity prices, prices for other factors of production may influence retail food prices in 2019. Electricity and diesel costs, as well as many other costs associated with food production, transport, and retail sales, are expected to rise, placing upward pressure on prices. Food-away-from-home prices are expected to continue growing at a consistent rate and to rise between 2.0 and 3.0 percent in 2019.

Changes to Food Category CPI Forecasts

The food-at-home CPI is an average of individual food CPIs, weighted by their relative importance or share of consumer expenditures.

Beef and veal prices decreased 1.0 percent from August to September but are 0.9 percent higher than this time last year. Beef production is still expected to expand in 2018 due to slightly higher expected carcass weights, combined with more fed cattle marketed and greater expected cow slaughter. Although feeder cattle prices are stronger than previously expected in late 2017, prices for fed cattle in 2018 are likely to remain below 2017 levels. Higher prices at earlier stages of production are likely to place upward pressure on retail beef and veal prices in 2019. ERS expects retail prices for beef and veal to increase 1.25 to 2.25 percent in 2018 and rise an additional 1.5 to 2.5 percent in 2019.

Prices for poultry fell 1.0 percent from August to September and are 0.8 percent lower than this time last year. While prices may increase at the retail level, price increases in 2018 and 2019 are still expected to be lower than the 20-year historical average of 2.0 percent. Lower projected feed costs and higher poultry production forecasts could place downward pressure on retail price inflation. Retail poultry prices are expected to change between 0.0 to 1.0 percent in 2018 and increase 1.0 to 2.0 percent in 2019.

Egg prices decreased 1.3 percent from August to September but are 10.1 percent above September 2017 levels. Retail egg prices are among the most volatile retail food prices, as they can be affected by seasonal demand. In 2017, more egg-laying birds and an increased number of eggs per hen placed downward pressure on prices. However, recent price increases at the farm and wholesale level may indicate that retail egg prices will continue to rise over the next several months. Egg prices are expected to increase 9.0 to 10.0 percent in 2018 but decrease between 1.0 and 0.0 percent in 2019.

Fats and oils prices increased 0.3 percent from August to September but are 0.2 percent lower than in September 2017. While prices for salad dressing rose 0.6 percent, and butter and margarine prices increased 1.4 percent from August to September, prices for other fats and oils, including peanut butter, decreased 0.5 percent in September. ERS expects prices for fats and oils to change between -0.5 and 0.5 percent in 2018 and fall an additional 3.0 to 2.0 percent in 2019.

Fresh vegetable prices decreased from August to September, falling 0.3 percent, but are 0.8 percent higher than in September 2017. The monthly dip in prices for fresh vegetables was primarily driven by a 2.4-percent decrease in the price for potatoes and a 0.9-percent decrease in lettuce prices from August to September. Fresh vegetable prices are expected to change between 0.0 and 1.0 percent in 2018 and increase an additional 2.5 to 3.5 percent in 2019.

See Changes in Food Price Indexes, 2016 through 2019.

Key Month-Over-Month Changes in the Food CPI

In September, pork prices fell 0.6 percent from the previous month, and prices are 2.4 percent lower than in September 2017. Lower beef prices are most likely adding pressure to lower pork prices as consumers make meat substitutions. In 2018, pork production is expected to continue expanding as more pork processing facilities come on line. As a result, ERS expects pork prices to change between -1.0 and 0.0 percent in 2018 and change between -0.75 and 0.25 percent in 2019.

Dairy product prices increased 0.1 percent from August to September but are unchanged from September 2017 prices. While retail milk prices were unchanged, ice cream and related product prices increased 1.5 percent, and cheese and related product prices rose 0.1 percent from August to September. Milk production is expected to rise at a modest rate of 1.1 percent in 2018. Dairy exports have strengthened but are expected to be limited for the rest of the year due to recent tariffs imposed by Mexico and China. Domestic demand for most dairy products has been relatively weak in the first half of the year but is expected to recover in the second half of 2018. ERS expects retail dairy prices to change between -1.0 and 0.0 percent in 2018 but rise 3.0 to 4.0 percent in 2019.

Prices for fresh fruits rose 1.0 percent from August to September and are up 0.3 percent compared with September 2017. Despite falling prices for apples and citrus fruits, banana prices were 0.4 percent higher, and other fresh fruit prices were up 4.7 percent from August to September. ERS expects fresh fruit prices to increase 1.5 to 2.5 percent in 2018 and increase 2.0 to 3.0 percent in 2019. 

In September, prices for cereals and bakery products rose 0.1 percent from the previous month and were 0.7 percent higher than September 2017. While prices for pasta, rice, and cornmeal fell 0.6 percent, prices for breakfast cereal rose 0.3 percent, and flour and prepared flour mix prices were up 0.7 percent from August to September. ERS expects prices for cereals and bakery products to increase 0.25 to 1.25 percent in 2018 and increase an additional 2.5 to 3.5 percent in 2019. 

Prices for nonalcoholic beverages rose 0.7 percent from August to September and are 0.6 percent higher than September 2017. While coffee prices fell by 0.4 percent, carbonated beverage prices increased 0.6 percent, and non-frozen juice prices were up 1.7 percent from August to September. Overall price increases for this category can be mainly attributed to frozen and non-frozen juices. Nonalcoholic beverage prices are expected to change between -0.5 to 0.5 percent in 2018 and change between -0.25 to 0.75 percent in 2019.

In September, prices for sugar and sweets increased 1.3 percent from August and are 0.4 percent higher than they were the same time last year. Candy and chewing gum prices also rose 1.3 percent from August to September. With Halloween right around the corner, prices could decrease slightly in October as stores offer specials on holiday candy. For the last 4 years, candy and chewing gum prices fell from September to October. Sugar and sweets prices are expected to increase 0.25 to 1.25 percent in 2018 and change between 0.0 and 1.0 percent in 2019.

Other foods, the largest consumer food spending category, remained unchanged from August to September, but this category is 0.2 percent higher than the same time last year. Prices for soup decreased 4.0 percent, prices for frozen and freeze-dried prepared foods remained unchanged, and prices for snacks increased 0.7 percent from August to September. ERS predicts in the other foods category to change between -0.25 to 0.75 percent in 2018 and rise 0.0 to 1.0 percent in 2019.

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 intermediate and final demand 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. Prices for unprocessed foods and feeds fell 1.3 percent, prices for processed foods and feeds decreased 1.5 percent, and prices for finished consumer foods were down 0.4 percent from August to September. Price changes at these earlier stages of production could be indicative of future trends at the retail level. Therefore, a trend of lower than average inflation (or deflation) for many foods at the retail level could be expected in the coming months.

In September, cattle prices increased 0.2 percent since August and are up 2.0 percent since this time last year. Wholesale beef prices also increased in September, rising 0.5 percent, and are up 1.1 percent from the previous year. Farm-level cattle prices are expected to decrease 3.0 to 2.0 percent in 2018 but could change between 0.0 and 1.0 percent in 2019. Wholesale beef prices are expected to change between 0.0 to 1.0 percent in 2018 and then decrease 3.0 to 2.0 percent in 2019.

Wholesale pork prices fell 1.0 percent from August to September and are 11.6 percent lower than this time last year. Wholesale pork prices are expected to decrease 7.0 to 6.0 percent in 2018 and decrease 2.0 to 1.0 percent in 2019.

Prices for farm-level eggs decreased 13.1 percent from August to September, and price levels are 8.2 percent lower than September 2017 levels. Egg prices are among the most volatile of food prices, typically peaking in the fourth quarter of the year and then falling in the first quarter of the new year. Farm-level egg prices are expected to increase 30.0 to 31.0 percent in 2018 but decrease 10.0 to 9.0 percent in 2019.

Prices for farm-level milk increased 4.9 percent from August to September, but prices are 14.1 percent lower than they were in September 2017. Wholesale dairy prices also rose last month, increasing 0.5 percent from August to September, but remain 3.0 percent lower than they were this time last year. Farm milk prices are expected to decrease 9.0 to 8.0 percent in 2018 but increase 1.0 to 2.0 percent in 2019. Wholesale dairy prices are forecast to decrease 3.0 to 2.0 percent in 2018 and change between -1.0 and 0.0 percent in 2019.

Farm-level soybean prices decreased 8.1 percent from August to September and are 16.6 percent lower than the September 2017 price level. Wholesale fats and oils prices also decreased on the month, falling 0.5 percent in September, and are 4.8 percent lower than September 2017 price levels. Farm-level soybean prices are expected to decrease 5.5 to 4.5 percent in 2018 and decrease an additional 6.0 to 5.0 percent in 2019. Prices for wholesale fats and oils are expected to decrease 2.5 to 1.5 percent in 2018 and decline an additional 3.0 to 2.0 percent in 2019.

Farm-level fruit prices increased 5.5 percent in September but are 4.1 percent lower than in September 2017. On the other hand, farm-level vegetable prices decreased in September, falling 6.1 percent, and prices are 12.7 percent lower than they were this time last year. Farm-level fruit prices are expected to decrease 3.0 to 2.0 percent in 2018 and decline an additional 4.0 to 3.0 percent in 2019. Farm-level vegetable prices are expected to decrease 7.0 to 6.0 percent in 2018 and decrease an additional 3.5 to 2.5 percent in 2019.

Farm-level wheat prices fell 6.9 percent from August to September but are 12.8 percent higher than they were in September 2017. Prices for wholesale wheat flour decreased, declining 2.5 percent from August to September, and prices were 1.3 percent lower than in September 2017. Farm-level wheat prices are expected to rise 14.0 to 15.0 percent in 2018 and increase an additional 4.0 to 5.0 percent in 2019. On the other hand, wholesale wheat flour prices are expected to change between -0.5 to 0.5 percent in 2018 and decline an additional 4.0 to 3.0 percent in 2019. 

See Changes in Producer Price Indexes, 2016 through 2019.