ERS Raises Its 2020 Food Price Inflation Forecast

Posted on Mon, 11/23/2020 - 13:16

The all-items consumer price index (CPI) rose a marginal 0.04% from September to October (before the seasonal adjustment), with the gauge of economy-wide inflation now up 1.2% from year-ago levels, reports USDA’s Economic Research Service (ERS). The CPI for all food rose 0.2 points from September to October, with food prices now up 3.9% from year-ago levels. The CPI for food-away-from home (restaurant purchases) increased 0.3 points in October to stand 3.9% above year-ago levels. The CPI for food-at-home (grocery store items) edged 0.2 points higher from September to October to stand 4.0% above year-ago levels.

ERS reports that so far this year, food-at-home prices have increased 3.4% and food-away-from-home prices have increased 3.0% relative to 2019. Once again, ERS reports beef and veal have had the greatest relative price increase, rising 10.0%, while fresh fruits have had the biggest relative price decrease, dropping 1.0%.

Noting that “Many prices have been relatively slow to retreat from the highs reached due to the pandemic,” ERS made some upward revisions to its forecasts this month. It now expects food-at-home prices to rise between 3.0% and 4.0% this year, with food-away-from home prices expected to climb 2.5% to 3.5%. Last month, ERS was calling for these categories to climb 2.5% to 3.5% and from 2.0% to 3.0%, respectively.

The 20-year historical average is for food-at-home prices to rise 2.0% and food-away-from home prices to climb 2.8%.

Looking ahead to 2021, ERS expects food-at-home prices to climb 1.0% to 2.0% and food-away-from-home prices to rise 2.0% to 3.0%.