ERS Trims Forecast for Supermarket Prices

Posted on 03/09/2017 10:19 AM

The all-items Consumer Price Index (CPI) held steady from November to December, but the index is up 2.1% from year-ago levels, according to USDA's Economic Research Service (ERS). It details that "prices increased for many goods and services, housing costs went up 3%, transportation costs rose 2.5%, and medical care costs increased 4.1%.

The CPI for all food also held steady between November and December and food prices were down 0.2% from year-ago levels last month. While the food-away-from-home CPI (restaurant buys) was up 2.3% from year-ago levels in December, the food-at-home CPI (grocery store purchases) was down 2% from year-ago levels.

For 2016 as a whole, food-at-home prices were down 1.3% from 2015 levels, the first annual decline in supermarket prices since 1967, according to ERS. Eggs were the downside leader for the year, dropping 21.1%, followed by a 6.3% drop for beef and veal. ERS explains, "The overall decline in retail food prices was due to several factors: increased production for many commodities, lower transportation costs as a result of deflated oil prices, and a strong U.S. dollar."

Also of note, ERS lowered its forecast for superamarket prices in 2017; it now calls for a rise between 0% and 1% this year, whereas last month it called for prices to climb between 0.5% and 1.5% in 2017. The forecast is well below the 20-year historical average for a 2.5% increase.

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