After soaring because of coronavirus outbreaks among packing plant employees, meat prices are on the decline for the first time this year and are headed lower, said the USDA on Tuesday. “These decreases align with the rebound in processing capacity after disruptions from Covid-19.”
In its monthly Food Price Outlook, the USDA said beef prices fell by 8 percent and pork and poultry meat by 2 percent during July, part of a broad reduction of food inflation during the month. “Meat prices in particular fell in July 2020 for the first time since January 2020,” said the USDA. “Prices are expected to continue to retreat from the highs reached as a result of the pandemic during 2020 and converge closer to historical trends over the course of 2021.”
For the first seven months of the year, beef and veal prices were 10.6 percent higher than at the same point in 2019, the largest increase for any food category. Fresh fruit had the largest decrease, 1.5 percent.
The USDA forecasts an increase of 3 percent for grocery prices this year, the largest annual increase since 2011. The 20-year average annual increase is 2 percent. Food inflation usually tracks the overall U.S. inflation rate, forecast for about 1 percent this year, but this year would be an exception because of the pandemic. Stay-at-home orders disrupted food marketing channels and created spot shortages of dairy, meat, pasta, and other products in late winter and early spring.
Grocery price are forecast to increase 1.5 percent in 2021, which would be a return to the pattern of modest year-to-year inflation. Beef, pork, and poultry prices are forecast to be lower in 2021.
Food ranks third among consumer expenditures, behind housing and transportation. Americans spend about 13 percent of their incomes on food, according to the Bureau of Labor Statistics.
The Food Price Outlook is available here.