USDA raises food price forecasts for 2023
USDA’s food price outlook data and forecasting methodology were revised this month. It stated, “The updated primary methods are based entirely on statistical models that are fitted to recent trends in the data. These methods provide wider initial prediction intervals that narrow over the forecast period as more data become available and the degree of uncertainty declines. Discussions of price changes will focus on the midpoint of these forecast intervals (titled “Mid” in the workbooks) and use the lower and upper bounds of a 95% prediction interval (based on past data, the 2023 level of inflation is expected to fall in this interval 19 out of 20 times) to reflect the level of uncertainty (titled “Lower” and “Upper” in the workbooks, respectively).”
In 2022, food prices increased 9.9%. Food-at-home (grocery store) prices jumped 11.4%, while food-away-from-home (restaurant) prices rose by 7.7%. USDA said, “Following an outbreak of Highly Pathogenic Avian Influenza (HPAI), egg prices had the largest price increase (32.2%) of any category tracked by ERS. Beef and veal prices increased the least (5.3%). Eleven food-price categories increased by more than 10%, including fats and oils (18.5%), poultry (14.6%), other meats (14.2%), cereals and bakery products (13.0%), other foods (12.7%), dairy products (12.0%), processed fruits and vegetables (12.0%), nonalcoholic beverages (11.0%) and sugar and sweets (10.4%). All food categories grew faster than their historical average rate, and the 20-year average inflation rate increased for all food categories.”
In 2023, all food prices are predicted to increase 7.1%, with a range from 4.2% to 10.1%. Grocery store prices are forecast to increase 8.0%, with a range from 4.5% to 11.7%. Restaurant prices are expected to increase 8.2%, with a range from 6.7% to 9.7%.
USDA noted: “Egg prices are predicted to increase 27.3% in 2023, with a prediction interval of 6.9% to 52.0. This wide prediction interval reflects the volatility in retail egg prices. Prices are expected to continue increasing for eight additional food categories that experienced consistent growth throughout 2022. In 2023, prices are predicted to increase for other meats (12.8%), dairy products (8.0%), fats and oils (16.5%), processed fruits and vegetables (9.6%), sugar and sweets (10.6%), cereals and bakery products (12.0%), nonalcoholic beverages (8.7%), and other foods (6.8%). Price decreases are expected for three price categories. Beef and veal prices are predicted to decrease 1.8% in 2023, with a prediction interval of -10.4% to 8.0%; pork prices are predicted to decrease 3.0%, with a prediction interval of -10.3% to 5.1%; and fresh fruit prices are predicted to decrease 1.7%, with a prediction interval of -7.5% to 4.5%.”
Click here to view the full report and data.
