Grocery store prices for food will rise by a lower-than-average 2 percent this year, held down by large supplies of broiler chickens and dairy products, according to a government forecast. The monthly Food Price Outlook said fish and seafood prices would rise at half their usual rate, also constraining food inflation. Poultry, seafood and dairy account for nearly 11 cents of every food dollar. Americans spend 59 cents of their food dollar for “food at home” – groceries – and 41 cents on carry-out and sit-down meals.
“Retail dairy prices have been falling in 2015, as the dairy market has seen declining exports and increasing imports, resulting in more dairy on the U.S. market,” said the USDA. “Milk prices, in particular, have declined – down 1.1 percent from July to August, and 7.2 percent since August 2014.” Dairy prices are forecast to rise by 1 percent this year, compared to the average annual increase of 2.8 percent.
Chicken prices are now 1.2 percent lower than a year ago. Growers increased production at the same time that some countries banned U.S. imports because of the bird-flu epidemic in the first half of this year. “This has resulted in more chicken broilers remaining on the U.S. market which, in turn, places downward pressure on retail chicken prices.” Overall, the USDA forecasts a 2-percent increase in poultry prices for 2015. Fish and seafood prices are expected to rise by 1.5 percent, far below the usual annual increase of 2.9 percent.
The forecast of a 2-percent increase in retail food prices is well below the 20-year average of 2.6 percent. “However, food price inflation will vary by category,” said the USDA. Egg prices will soar by 13 percent because bird flu killed one-tenth of the egg-laying flock and beef prices are forecast to rise by 6 percent because of short supplies. However, pork prices are expected to drop by 3.5 percent. Hog farmers are expanding herds, resulting in lower hog prices and leading to lower consumer prices.