This page provides the following information for July 2017:
The all-items Consumer Price Index (CPI), a measure of economy-wide inflation, was down 0.1 percent from June to July 2017 but is 1.7 percent above the July 2016 level. The CPI for all food rose 0.2 percent from June to July, and food prices were 1.1 percent higher than the July 2016 level. The degree of food price inflation varies depending on whether the food was purchased for consumption away from home or at home.
Food-at-home prices and food-away-from-home prices have recently diverged. Restaurant prices have been rising consistently month-over-month due, in part, to differences in the cost structure of restaurants versus supermarkets or grocery stores. Prices at food-at-home outlets have posted lower year-over-year price increases. Restaurant prices primarily comprise labor and rental costs with only a small portion going toward food. For this reason, decreasing farm-level and wholesale food 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 2017, supermarket prices are expected to change between -0.25 and 0.75 percent. Despite declining prices in 2016, poultry, fish and seafood, and dairy prices are expected to rise in 2017. 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. In particular, drought or flood conditions throughout the U.S. could have large and lasting effects on fruit, vegetable, dairy, and egg prices. Also, a stronger U.S. dollar could continue to make the sale of domestic food products overseas more difficult. This would increase the supply of foods on the domestic market, placing downward pressure on retail food prices.
Looking ahead to 2018, retail food prices are expected to rise between 1.0 to 2.0 percent. While fats and oils and processed fruits and vegetables could potentially decline in price, prices for meats, eggs and dairy are expected to increase. Due to deflation in 2016 and for over half of 2017, expected price increases would still leave overall price levels in 2018 lower than in 2015.
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 increased 1.1 percent from June to July and are 1.7 percent higher than this time last year. As of July 2017, the U.S. cattle herd has expanded to its largest size since July 2008. Relatively large cattle placements in feedlots in the first half of 2017, as well as more cattle available outside of feedlots, has increased the forecast for commercial beef production. This has resulted in downward pressure on prices throughout the cattle and beef complex. ERS predicts beef and veal prices to decrease 2.0 to 1.0 percent in 2017 but increase 1.0 to 2.0 percent in 2018.
In July, pork prices rose 1.5 percent from the previous month, but prices are flat compared with July 2016. Despite declining pork chop prices, bacon prices increased 1.6 percent and ham prices increased 3.8 percent in July. Lower beef prices are most likely adding pressure to lower pork prices. USDA forecasts a 4.9-percent increase in pork production in 2017, and large pork supplies are expected to change retail prices between -0.5 to 0.5 percent in 2017 but increase 1.5 to 2.5 percent in 2018.
Fats and oils prices are up 1.2 percent from June to July and are 1.9 percent higher than July 2016. While peanut butter prices fell in July, butter and margarine prices increased 2.4 percent from June to July, and salad dressing prices rose 2.8 percent. ERS predicts fats and oils prices to increase between 0.0 to 1.0 percent in 2017 and to decrease 1.0 to 0.0 percent in 2018.
Prices for poultry rose 0.1 percent from June to July and are 0.6 percent higher than last year. Despite high broiler production, many broilers have low weights which, along with larger birds demanding higher prices, has contributed to higher retail poultry prices. While prices are expected to increase at the retail level, price increases are still expected to be lower than the 20-year historical average of 2.1 percent. ERS predicts prices to rise between 0.5 and 1.5 percent in 2017 and to increase an additional 1.5 to 2.5 percent in 2018.
Egg prices increased 0.2 percent from June to July but are 9.5 percent below July 2016 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 has continued to place downward pressure on prices. ERS expects egg prices to decrease 9.0 to 8.0 percent in 2017 but increase 1.0 to 2.0 percent in 2018.
Prices for dairy products increased 0.6 percent in July and are 0.9 percent higher than they were in July 2016. Retail milk prices increased 0.1 percent from June to July, cheese and related product prices rose 0.6 percent, and ice cream and related product prices increased 0.1 percent. Dairy imports have declined from relatively high levels in the first quarter of 2016. Dairy exports have strengthened and are expected to continue rising for products with high skim-milk content (for example, nonfat dry milk and whey products). Domestic demand for most dairy products has recently been below previous annual levels but is expected to recover during the year. ERS expects retail dairy product prices to rise between 0.0 and 1.0 percent in 2017 and to increase an additional 1.5 to 2.5 percent in 2018.
Prices for fresh fruits increased 0.6 percent from June to July and are up 2.3 percent compared with July 2016. Despite falling prices for bananas and other fresh fruit, apple prices rose 2.8 percent, and citrus prices increased 3.2 percent since June. ERS expects fresh fruit prices to change between -0.5 to 0.5 percent in 2017 and to increase 2.0 to 3.0 percent in 2018. Fresh vegetable prices fell 0.3 percent from June to July, but prices are still 1.6 percent higher than in July 2016. ERS expects fresh vegetable prices to decrease between 1.5 and 0.5 percent in 2017 but increase 0.0 to 1.0 percent in 2018. Factors, such as a stronger U.S. dollar, low oil prices, and seasonal availability have placed downward pressure on retail fresh produce prices.
In July, prices for cereals and bakery products decreased 0.2 percent compared with the previous month and are 0.5 percent lower than they were in July 2016. Prices for bread fell 1.4 percent, and retail rice, pasta, and cornmeal prices decreased 0.1 percent from June to July. While prices for cereals and bakery products were, on average, lower last month, farm-level wheat prices have been increasing as U.S. production has declined due to severe drought conditions affecting the Northern Plains. ERS expects cereals and bakery products prices to rise between 0.5 to 1.5 percent in 2017 and to increase 3.0 to 4.0 percent in 2018.
Prices for nonalcoholic beverages decreased 0.1 percent from June to July but are up 0.3 percent since July 2016. Carbonated beverage prices decreased 0.8 percent from June to July, and prices for coffee fell 0.3 percent over the same period. ERS predicts nonalcoholic beverage prices to increase 0.0 to 1.0 in 2017 and an additional 0.0 to 1.0 percent in 2018.
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. Unprocessed foods and feeds posted a monthly increase of 1.7 percent from June to July, prices for processed foods and feeds fell 0.3 percent, and finished consumer foods were down 0.5 percent over the same period.
Inflationary pressures lessened for farm-level cattle and wholesale beef prices in 2016 and are expected to continue to be low in 2017. In July, cattle prices decreased 6.6 percent but are up 0.6 percent since this time last year. Wholesale beef prices decreased in July, falling 13.5 percent, and are down 1.1 percent from the previous year. ERS expects farm-level cattle prices to rise between 2.0 to 3.0 percent in 2017 but to decrease 1.0 to 0.0 percent in 2018. Wholesale beef prices are expected to increase 0.0 to 1.0 percent in 2017 but to decrease 3.0 to 2.0 percent in 2108.
Wholesale pork prices rose 7.0 percent from June to July and are 7.3 percent higher than this time last year. Overall, pork production is higher, placing downward pressure on prices—wholesale pork prices declined 2.1 percent in 2016. However, ERS predicts wholesale pork prices to increase 4.0 to 5.0 percent in 2017 and 2.5 to 3.5 percent in 2018.
Prices for farm-level eggs increased 14.3 percent from June to July. Price levels are 5.3 percent higher than July 2016 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. In 2015, prices were also affected by the Highly Pathogenic Avian Influenza (HPAI), which reduced the count of table-egg-laying birds in many Midwestern and Pacific Northwestern States. ERS predicts farm-level egg prices to increase 0.0 to 1.0 percent in 2017 and to increase an additional 6.0 to 7.0 percent in 2018.
Farm-level soybean prices increased 10.6 percent from June to July but are 7.6 percent below the July 2016 price level. Wholesale fats and oils prices increased on the month, rising 0.6 percent in July, and are 4.4 percent higher than July 2016 price levels. Farm-level soybean prices are expected to change between -0.5 to 0.5 percent in 2017 and to rise 3.5 to 4.5 percent in 2018. ERS expects prices for wholesale fats and oils to rise 4.0 to 5.0 percent in 2017 but to decrease 2.0 to 1.0 percent in 2018.
Farm-level fruit prices rose 1.9 percent in July and are 13.1 percent higher than in July 2016. Farm-level vegetable prices fell in July, decreasing 4.6 percent. Farm-level vegetable prices are now 1.2 percent lower than they were this time last year. Farm-level fruit prices are expected to increase 1.0 to 2.0 percent in 2017 but to decrease 7.5 to 6.5 percent in 2018. Farm-level vegetable prices are expected to decrease 2.0 to 1.0 percent in 2017 and to decrease an additional 8.0 to 7.0 percent in 2018.
Farm-level wheat prices rose 24.6 percent from June to July and are 41.2 percent higher than they were in July 2016. Farm-level price increases have also affected wholesale wheat flour prices, which rose 10.4 percent from June to July, and 15.6 percent since June 2016. ERS expects farm-level wheat prices to increase 20.0 to 21.0 percent in 2017 and an additional 15.0 to 16.0 percent in 2018. Wholesale wheat flour prices are also expected to increase in 2017, but not to the same extent, and ERS forecasts a 3.0 to 4.0 percent increase in 2017. However, wholesale wheat flour prices are expected to decline 3.0 to 2.0 percent in 2018.
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