This report summarizes the February 2022 forecasts, which incorporate the January 2022 Consumer Price Index and Producer Price Index numbers.
See Changes in Food Price Indexes, 2019 through 2022 for data files.
Consumer Price Index for Food (not seasonally adjusted)
The all-items Consumer Price Index (CPI), a measure of economy-wide inflation, increased by 0.8 percent from December 2021 to January 2022 before seasonal adjustment, up 7.5 percent from January 2021. The CPI for all food increased 1.0 percent from December 2021 to January 2022, and food prices were 7.0 percent higher than in January 2021.
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 January 2022 and was 6.4 percent higher than January 2021; and
- The food-at-home (grocery store or supermarket food purchases) CPI increased 1.2 percent from December 2021 to January 2022 and was 7.4 percent higher than January 2021.
Food price increases are expected to be between 20-year averages and the rapid increases observed during the pandemic. In 2022, food-at-home prices are predicted to increase between 2.0 and 3.0 percent, and food-away-from-home prices are predicted to increase between 4.0 and 5.0 percent. Price increases for food away from home are expected to exceed historical averages and be similar to the inflation rate in 2021. Upward pressures on meat prices are expected to ease in the latter half of 2022.
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 mostly 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 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 0.3 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.
In 2021, food-at-home prices increased 3.5 percent and food-away-from-home prices increased 4.5 percent. The CPI for all food increased an average of 3.9 percent in 2021. 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 had the largest relative price increase (9.3 percent) and the fresh vegetables category the smallest (1.1 percent). No food categories decreased in price in 2021 compared with 2020.
CPI Forecast Changes This Month
The ranges for eight food categories, as well as for three aggregate categories, were revised upward this month. Forecast ranges for fish and seafood, dairy products, fats and oils, fresh fruits, processed fruits and vegetables, cereals and bakery products, nonalcoholic beverages, and other foods, as well as the aggregate categories of all food, food away from home, and food at home were revised upward. No food categories were revised downward.
The large increases in all-food, food-away-from-home, and food-at-home prices in January were driven by price increases for many products. While prices for the aggregate category of meats decreased, prices for 11 disaggregate food categories increased by more than a percent. All food prices are now predicted to increase between 2.5 and 3.5 percent; food-away-from-home prices are predicted to increase between 4.0 and 5.0 percent; and food-at-home prices are predicted to increase between 2.0 and 3.0 percent in 2022.
Fish and seafood prices have continued to rise—by 1.3 percent in January 2022—due in large part to a 2.4-percent increase in the price of fresh fish and seafood. Fish and seafood prices are predicted to increase between 3.5 and 4.5 percent in 2022.
Rapid increases in the consumption of dairy products have driven increases in retail prices in recent months. This trend continued in January 2022 with a 1.4-percent increase in the prices for dairy products. Dairy product prices are predicted to increase between 2.5 and 3.5 percent in 2022.
Following large price increases in January, forecast ranges for fats and oils, fresh fruits, processed fruits and vegetables, cereal and bakery products, nonalcoholic beverages, and other foods have been adjusted upward. Fats and oil prices are predicted to increase between 3.0 and 4.0 percent; fresh fruit prices are predicted to increase between 2.0 and 3.0 percent; processed fruit and vegetable prices are predicted to increase between 2.5 and 3.5 percent; cereal and bakery product prices are predicted to increase between 2.0 and 3.0 percent; nonalcoholic beverage prices are predicted to increase between 1.5 and 2.5 percent; and other food prices are predicted to increase between 1.5 and 2.5 percent in 2022 compared with 2021.
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 forecast ranges for farm-level cattle, wholesale beef, wholesale poultry, and farm-level fruits were revised upward this month. Forecast ranges for wholesale pork and farm-level vegetables were revised downward.
Farm-level cattle prices have mirrored beef prices, which were 22.8 and 43.9 percent higher in January 2022 than January 2021, respectively. High global demand for U.S. beef has driven price increases in this sector. Farm-level cattle prices are predicted to increase between 7.5 and 10.5 percent in 2022. Wholesale beef prices are predicted to increase between 4.5 and 7.5 percent.
Wholesale pork prices decreased by 4.3 percent in January 2022 but remain 3.3 percent above January 2021 prices. Wholesale pork prices are now predicted to increase between 0.0 and 3.0 percent in 2022.
Wholesale poultry prices increased by 3.1 percent from December 2021 to January 2022, with decreasing levels of chicken meat in cold storage. Wholesale poultry prices are now predicted to increase between 4.0 and 7.0 percent in 2022.
Farm-level fruit prices increased by 3.9 percent, while farm-level vegetable prices decreased by 3.4 percent from December 2021 to January 2022. Farm-level fruit prices are now predicted to increase between 1.0 and 4.0 percent in 2022, and Farm-level vegetable prices are predicted to increase between 0.0 and 3.0 percent in 2022.
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.
Source: USDA
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