Since 2013, grocery prices have risen so slowly that the Agriculture Department has lowered its calculation of the “historical” inflation rate — the 20-year average — to 2.2 percent annually, down from 2.5 percent in 2016. USDA economists say 2017 is shaping up as another year of negligible price increases at the grocery story, now forecast at 0.5 percent.
Grocery prices grew at less than the 20-year average for each year since 2012, culminating in 2016, when they were an average 1.3-percent less than in 2015, the first instance of grocery-price deflation since 1967, aided by declines in the cost of red meat, poultry, egg and dairy. Americans spend nearly 58 cents of the food dollar on groceries.
In its monthly Food Price Outlook, USDA lowered its price forecasts for poultry and fresh produce for the year. Poultry prices are 1.1-percent lower than a year ago “partly due to an increase in broiler production,” said USDA. “Furthermore, a strong U.S. dollar contributed to more chicken broilers remaining in the U.S. market which, in turn, places downward pressure on retail chicken prices.” Fresh fruit prices are 4.3 percent lower and fresh vegetables are 7.2 percent lower than a year ago. Poultry and fresh produce account for 10.1 cents of the U.S. food dollar.