“Breaking Down the Bite: USDA Predicts Slower Food Price Increases in 2023 After Record Jump in 2022”

Breaking Down the Bite

“Breaking Down the Bite: USDA Predicts Slower Food Price Increases in 2023 After Record Jump in 2022”

According to the United States Department of Agriculture (USDA) Economic Research Service (ERS), food prices are expected to continue to rise in 2023 but at a slower rate than in 2022 (“Food Price Outlook,” 2023). In 2022, food prices increased by 9.9%, with food-at-home prices increasing by 11.4% and food-away-from-home prices increasing by 7.7%. All food price categories tracked by the USDA ERS increased by more than 5%, with egg prices having the largest price increase of 32.2% between 2021 and 2022 (“Food Price Outlook,” 2023).

For 2023, all food prices are predicted to increase by 7.1%, with a prediction interval of 4.2 to 10.1%. Food-at-home prices are predicted to increase by 8.0%, with a prediction interval of 4.5 to 11.7%, and food-away-from-home prices are predicted to increase by 8.2%, with a prediction interval of 6.7 to 9.7% (“Food Price Outlook,” 2023).

Since the 1970s, food-at-home and food-away-from-home prices have typically increased at similar rates. However, their rates of growth have diverged since 2009, with food-at-home prices deflating in 2016 and 2017, while monthly food-away-from-home prices have been rising consistently since then. This divergence is due to differences in the costs of serving prepared food at restaurants and retailing food in supermarkets and grocery stores (“Food Price Outlook,” 2023).

In 2020, food-at-home prices increased by 3.5%, and food-away-from-home prices increased by 3.4%. This convergence was largely due to 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, with beef and veal prices increasing by 9.6%, pork prices by 6.3%, and poultry prices by 5.6%. The only category to decrease in price in 2020 was fresh fruits, by 0.8% (“Food Price Outlook,” 2023).

In 2021, food-at-home prices increased by 3.5%, and food-away-from-home prices increased by 4.5%. The CPI for all food increased by an average of 3.9% in 2021. Of all the CPI food-at-home categories tracked by the USDA ERS, the beef and veal category had the largest relative price increase of 9.3%, and the fresh vegetables category had the smallest increase of 1.1%. No food categories decreased in price in 2021 compared to prices in 2020 (“Food Price Outlook,” 2023).

The data series and forecasting methodology of the Food Price Outlook were revised in January 2023 based on a new approach documented in a report. The Food Price Outlook Summary Findings are based on the revised data series, and forecasts using the prior forecasting methodology are available as data files (“Legacy Data”). ERS will continue to produce new monthly forecasts using both the updated methods and the legacy methods through June 2023 (“Food Price Outlook,” 2023).

Reference:

United States Department of Agriculture (USDA) Economic Research Service. (2023, January). Food price outlook: Summary findings. Retrieved from https://www.ers.usda.gov/data-products/food-price-outlook/summary-findings/#:~:text=In%202023%2C%20all%20food%20prices,of%204.5%


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