Agricultural Economic Report No. (AER-780) 54 pp

June 1999

Food Cost Review, 1950-97

Food prices, as measured by the Consumer Price Index (CPI), increased 2.6 percent in 1997. This increase was greater than the overall increase in the CPI (which rose 2.3 percent) for the third consecutive year. Higher charges for processing and distributing food, as measured by the farm-to-retail price spread, were primarily responsible for the 1997 increase. The prices farmers received for commodities, as measured by the farm value of USDA's market basket of foods, dropped 4.4 percent. The farm value share of the food dollar spent in grocery stores in 1997 was 23 percent, a decrease of 2 percent from 1996. The farm-to-retail price spread of USDA's market basket of foods rose 4.7 percent, partly reflecting higher prices of inputs, such as labor.

Keywords: Retail food prices, farm-to-retail price spread, farm value share, food marketing costs, food spending, profits, productivity

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