At the grocery store or at the restaurant, Americans will see the smallest rise in food prices since 2013, a negligible 1.5 percent, says a new government forecast. USDA economists lowered their food inflation forecast for the second month in a row to reflect falling prices for beef, pork and seafood.
The consumer price index for food is a scant 1 percent higher than a year ago. “The degree of food price inflation varies depending on whether the food was purchased for consumption away from home or at home,” said USDA’s monthly Food Price Outlook. Grocery prices are 0.7 percent lower than a year ago while food away from home, a category that ranges from fancy dining to food trucks, is up by 2.6 percent.
Cattle and hog producers are expanding herds, which means a larger supply of beef and pork at the same time the strong dollar is tempering exports. “This increased supply, along with weak beef demand, has placed downward pressure on retail beef prices,” said USDA. Beef prices are 5.4 percent lower than a year ago. Beef prices usually go up by 4.5 percent a year but will average a 3 percent decline this year, forecasts USDA.
Pork prices are forecast to fall by 1 percent this year, compared to the usual 2.5 percent increase. At present, retail prices are 2.4 percent lower than a year ago. “Pork production is expected to continue expanding in the second half of 2016,” said USDA, which would discourage price increases. Seafood and poultry are forecast to rise by only 0.5 percent — a smaller increase than thought earlier. Retail purchases of meat, poultry and fish account for 12.3 cents of each dollar in food spending.
Egg prices soared by an average 17.8 percent last year due to the worst-ever U.S. epidemic of bird flu, and now are forecast for a 12.5 percent decline this year. “Overall, as the industry continues to recover from this outbreak, prices at the retail level are expected to decline in 2016,” said USDA.
Initially, USDA forecast food prices would rise 2.5 percent this year, on par with the 20-year average of 2.6 percent. It has lowered its forecast for food-at-home for three months in a row. The latest estimate is a 1 percent increase for the year. Food-away-from-home is forecast for a 3 percent rise. Americans spend 58.7 cents of the food dollar on groceries.