Lower beef, pork and poultry prices will bring the fifth year in a row of lower-than-average increases in grocery prices, says the monthly Food Price Outlook. The USDA “now predicts food-at-home [supermarket] prices to rise 1.5-2.5 percent — a rate of inflation that could again fall below the 20-year historical average of 2.5 percent.”
Before the new forecast of a 2-percent increase, the USDA predicted an increase of 2.5 percent in 2016. The strong dollar and low oil prices could hold down prices for the year by reducing the cost of imports and shipping.
Pork prices are running 7.3-percent lower than a year ago and poultry prices are 3.3-percent lower. For both meats, larger production and a downturn in exports will mean more pork and poultry at the market. Poultry prices are forecast to rise 1 percent this year, pork by one-half of 1 percent, and beef to fall .5 percent. Americans spend nearly 59 cents of the food dollar at the grocery store, with 10.4 cents spent on red meat and poultry.
Fresh vegetables cost 5.3-percent more than a year ago, although they are down a bit from January. “Factors such as a stronger U.S. dollar and low oil prices, have mitigated the impact of the [California] drought,” said the USDA. It now forecasts a price increase of 2.5 percent for the year, compared to the previous 3 percent. About 4 cents of the food dollar is spent on fresh vegetables.
Prices of carbonated beverages are up since the start of the year while coffee is down. The USDA forecasts an increase of 1.5 percent this year for nonalcoholic beverages, higher than the 20-year average of 1.2 percent but lower than its previous forecast of a 2-percent increase. Seven cents of the food dollar go to nonalcoholic beverages.