Two-thirds of the way through 2017, the government says grocery prices are headed for a barely perceptible increase of 0.25 percent this year, thanks to lower red meat, egg and fresh produce prices. This year’s marginal increase follows the first instance of retail food price deflation in half a century, the 1.3-percent year-on-year decline in grocery prices in 2016.
The U.S. cattle inventory is the largest since August 2008, meaning more beef production and lower prices at the supermarket, said USDA. “Lower beef prices are most likely adding pressure to lower pork prices,” says the monthly Food Price Outlook. “Despite declining ham prices, bacon prices increased 12.7 percent and pork chops increase 2 percent in August.”
Usually, grocery prices increase by an average 2.2 percent annually. USDA economists said 2018 could be the fourth year in a row of below-normal food inflation. “While fats and oils and processed fruits and vegetables could potentially decline in price, prices for meats, eggs and dairy are expected to increase. Due to deflation in 2016 and over half of 2017, the expected price increase would still leave overall prices levels in 2018 lower than in 2015,” when retail food prices rose 1.2 percent, said USDA.
Meanwhile, a spot check of grocery prices in 25 states indicated a fall marketbasket of food would cost $51.13, an increase of 3 percent from a year ago due to higher prices for bacon, chicken breast, sliced ham, orange juice, whole milk and cheese, said the largest U.S. farm group. Bacon had the largest increase, up 19 percent. Economist John Newton of the American Farm Bureau Federation said there’s a bacon craze “in restaurants and everywhere else, creating an inventory decline and thus a price increase.”