The Consumer Price Index (CPI) for all food climbed 0.1% from September to October, but food prices are still down 0.4% from year-ago levels, according to USDA's Economic Research Service (ERS). It details that while the food-away-from-home (restaurant buys) CPI rose 0.1% in October to stand 2.4% above October 2015 levels, the food-at-home CPI held steady in October and is down 2.3% from year-ago levels.
Retail food prices have remained flat or declined for 8 of the first 10 months of 2016, according to ERS. In contrast, restaurant prices have been rising consistently this year. The difference is in part because restaurant prices primarily reflect labor and rental costs, with only a small portion going toward food.
ERS now predicts supermarket prices will decline between 0.25% and 1.25% in 2016, the first time food prices could reflect annual deflation since 1967. This represents a decline in the forecast from last month due to recent declines in prices for beef and veal, poultry and eggs.
In 2017, supermarket prices will likely rise between 0.5% and 1.5%, according to ERS. This also represents a decline from its projection for a 1% to 2% rise last month. "Despite the expectation for declining prices in 2016, poultry, fish and seafood, an prices are expected to rise in 2017," ERS explains.