In its first forecast of 2024 food costs, the government said grocery prices would climb by a modest 0.9 percent next year. If so, it would be the lowest annual grocery inflation rate in five years and mark the end of the period of high food inflation that followed the pandemic.
Also on Tuesday, USDA economists lowered their forecast of grocery price inflation for this year for the fifth month in a row, to 4.9 percent. The forecast at the start of the year was 8.6 percent.
“Food prices are expected to grow more slowly in 2023 than in 2022 but still at above historical-average rates,” said the monthly Food Price Outlook report. “Food prices are expected to continue to decelerate but not decline in 2024.”
Increases were forecast in 2024 for fats and oils, up 6.1 percent; sugar and sweets, up 8.5 percent; and processed fruits and vegetables, up 7.1 percent — double or more of their long-term average increases. But pork, egg, and dairy prices were forecast to fall from this year’s levels — eggs by 11 percent — and prices for fresh fruits and fresh vegetables should hold steady, according to the USDA.
Pork prices were forecast to fall this year, by 2.9 percent, in a retreat from the 8.7 percent increase of 2022. The largest increases this year would be fats and oils, up 9.6 percent; sugar and sweets, also up 9.6 percent; and processed fruits and vegetables, up 9.2 percent.
Grocery prices soared 11.4 percent in 2022 — the largest rise in half a century, with double-digit increases for poultry, fats and oils, sugar and sweets, cereal and bakery products, and processed fruits and vegetables. Often-volatile, egg prices skyrocketed 32 percent, due in part to an outbreak of bird flu.
The USDA estimated an overall food inflation rate, including groceries and “food away from home” — a category that includes restaurant meals, carry-out food, and meals in institutional settings — of 5.8 percent for this year. By comparison, the Bureau of Labor Statistics reported earlier this month that food prices had increased 5.7 percent over the past 12 months, the lowest annualized rate since 5.3 percent in October 2021.
Food is the second-largest expense, after housing, for Americans, who spend 13.4 cents of each dollar on food. Most of that, by a 3-to-2 margin, goes to “food at home.”