ERS Raises Its Outlook for Restaurant Price Inflation in 2021

Posted on Fri, 10/23/2020 - 12:45

The all-items consumer price index edged 0.1 point higher from August to September, to stand 1.4% above year-ago levels, according to USDA’s Economic Research Service (ERS). This is a widely watched measure of economic inflation, with food prices playing a major role.

The CPI for all food held steady from August to September, with prices up 3.9% from year-ago levels, according to ERS. But this masked offsetting changed in the individual components of the index. Food-away-from-home (restaurant purchases) climbed 0.6 points in September to stand 3.8% above September 2019 levels. Food-at-home (grocery store) prices declined 0.4 points from August to September, but they are still up 4.1% from year-ago levels.

So far in 2020, food-at-home prices have climbed 3.4% and food-away-from-home prices have climbed 2.8%, relative to 2019 at this point. ERS details that “Of all the CPI food categories that USDA’s Economic Research Service tracks, the category of beef and veal has had the largest relative price increase (10.2%); fresh fruits have had the largest relative price decrease (1.2%).”

ERS also notes that prices have been relatively slow to retreat from pandemic highs, prompting some upward forecast adjustments this month. ERS still expects food-at-home prices to climb between 2.5% and 3.5% and food-away-from-home prices to rise between 2.0% and 3.0% in 2020.

But ERS did tweak its food-away-from-home price outlook for 2021. It now projects those prices will climb 2.0% to 3.0% in 2021, which is a half point increase on both ends of the range from its September outlook. But it maintained its forecast for food-at-home prices to climb 1.0% to 2.0% in 2021.

September food price index