Americans will see a fourth year of smaller-than-usual increases in food prices, thanks to weaker beef and pork prices, says the monthly Food Price Outlook report. The USDA report forecasts a food inflation rate of 2 percent this year, nearly the same as the 1.9 percent of 2015 and the 20-year average of 2.6 percent annually. Egg prices, which soared during the second half of 2015, are estimated to plunge 9.5 percent this year, a “singularly large” adjustment by the USDA, which tends to make gradual adjustments in its food-inflation reports.
Lower grocery prices will pull down the the overall food-inflation rate, said the USDA. Americans spend nearly 58 cents of the food dollar on groceries and a little over 43 cents on food away from home, which covers restaurants, school cafeterias and carry-out food. The USDA says grocery prices will rise 1.5 percent this year, compared to its forecast two months ago of a 2.5-percent rise. The major factor in the decline is lower meat prices. Beef and pork account for one-tenth of grocery spending.
Beef prices are 5-percent lower than a year ago, the result of a rebuilding of cattle herds and the strong dollar that keeps beef on the domestic market and out of export channels. Beef prices skyrocketed in 2014 and 2015 due to tight supplies. Prices are forecast to fall 1.5 percent this year. Pork prices fell 3.9 percent last year and are now expected to hold steady this year. Like beef, pork supplies are large due to larger herds and a strong dollar that discourages exports.
Egg farmers have rebuilt their flocks after the worst-ever bird-flu epidemic last year, and egg production is nearly back to year-ago levels. “Overall, as the industry continues to recover from this outbreak, prices at the retail level are expected to decline in 2016,” said the USDA.