After two years of higher-than-normal grocery inflation, retail food prices are headed for their first year-over-year decline since 2017, said USDA economists on Thursday. Grocery prices would be an average of 0.4 percent lower this year than in 2023, led by falling prices for pork, eggs, fresh vegetables, and cereal and bakery products.
For American consumers, food is the second-largest expense, after housing, accounting for 13.4 cents of each $1 in spending. Two-thirds of food expenditures are for groceries.
“In 2024, prices for most food categories are predicted to change at a rate below their 20-year historical average” of 2.7 percent, said the USDA’s monthly Food Price Outlook report. Pork prices would fall 1.4 percent, their second annual decline in a row.
Egg prices were forecast to fall by 4.6 percent, fresh vegetables by 0.9 percent, and bakery and cereal products by 1.1 percent.
A resurgence of bird flu threatens egg production, and prices, in the near term, said the USDA. “The outbreak has affected about 4.5 million birds and 20 commercial flocks in the past 30 days … and price impacts of the outbreak will be monitored closely.” Outbreaks of highly pathogenic avian influenza (HPAI) drove egg prices up 32 percent in 2022. Prices fell in 2023 as growers rebuilt their flocks.
California was hit the hardest by bird flu this month, losing a total of 1.6 million egg-laying hens, pullets being raised to produce eggs, and broiler chickens, according to USDA data. On Tuesday, Indiana reported its first outbreak of HPAI since last May, in a turkey flock of 13,071 birds in Daviess County in the southwestern part of the state.
Beef and veal prices were forecast to rise 5.8 percent this year, the largest increase among the USDA’s food categories. “Prices remain elevated following consistent growth in 2023,” said the report. Beef prices rose 3.6 percent last year. Fats and oils would have the second-largest increase, 3.6 percent.
In 2022, grocery prices skyrocketed 11.4 percent, the highest inflation rate since 14.9 percent in 1974, the first year of USDA records. The grocery inflation rate dropped to 5 percent in 2022.
Grocery prices recorded back-to-back declines less than a decade ago, falling 1.3 percent in 2016 and 0.2 percent in 2017.