Grocery prices will rise a modest 1.5 percent in 2021, close to the long-term average and half of the larger-than-usual increase expected this year, said the USDA in its first forecast of food inflation in the new year. “Food at-home prices are expected to retreat from highs reached as a result of the outbreak of Covid-19 by the end of 2020 and converge closer to historical trends over the course of 2021,” said the Food Price Outlook.
“Much of the supply chain disruption and decreased processing capacity that occurred due to COVID-19 is expected to continue to improve,” said the monthly Outlook. Grocery prices are expected to climb by 3 percent this year compared to price levels in 2019, driven by sharp increases in meats. Beef prices are forecast to run 8 percent and pork 4.5 percent above last year’s levels, roughly double their usual rate of increase.
In 2021, prices for red meat and poultry are expected to plateau or decline while most other foods show marginal increases. Beef prices would fall 2 percent. Pork and poultry prices would remain stable. Consumers spend 21 percent of their grocery dollar on meat, poultry and fish.