This page highlights the March 2022 projections, which include the Consumer Price Index and Producer Price Index figures from February 2022.
Consumer Price Index for Food (not seasonally adjusted)
Before seasonal adjustment, the all-items Consumer Price Index (CPI), a measure of overall inflation, climbed by 0.9 percent from January to February 2022, up 7.9 percent from February 2021. From January to February 2022, the CPI for all foods climbed by 1.0 percent, and food costs were 7.9% higher than in February 2021.
Depending on whether the food was purchased for consumption away from home or at home, the level of food price inflation varies:
- The CPI for food purchased outside of the home (restaurant purchases) climbed 0.4 percent in February 2022, and was 6.8% higher than in January 2021; and
- The CPI for food purchased at home (grocery shop or supermarket) climbed 1.4 percent from January to February 2022, and was 8.6 percent higher than February 2021.
Increases in food prices are likely to be higher than those seen in 2020 and 2021. Food prices at home are expected to rise between 3.0 and 4.0 percent in 2022, while food prices away from home are expected to rise between 5.5 and 6.5 percent. In 2021, price increases for food outside the home are likely to outpace historical averages and inflation.
Food prices at home and food prices away from home both climbed at similar rates between the 1970s and the early 2000s. However, their growth rates have largely differed since 2009; although food-at-home prices deflated in 2016 and 2017, monthly food-away-from-home prices have been steadily increasing since then. The disparity stems in part from the expense of providing cooked food in restaurants versus the cost of selling food in supermarkets and grocery shops.
Food prices at home will rise 3.5 percent in 2020, while food prices away from home will rise 3.4 percent. The significant rise in food-at-home costs fueled this convergence, while food-away-from-home price inflation remained within 0.3 percentage points of the 2019 inflation rate. The meat categories saw the biggest price increases: beef and veal prices rose 9.6%, pig prices rose 6.3 percent, and poultry prices rose 5.6 percent. Fresh fruits were the only category to see a price decline in 2020, by 0.8 percent.
Food prices at home rose 3.5 percent in 2021, while food prices away from home rose 4.5 percent. In 2021, the CPI for all foods grew by 3.9 percent on average. The beef and veal category had the biggest relative price increase (9.3%) of all the CPI food-at-home categories examined by the USDA’s Economic Research Service (ERS), while the fresh vegetables category had the fewest (1.1 percent). In comparison to 2020, no food categories had price decreases in 2021.
This month, the ranges for 11 food categories and six aggregate categories were revised upward. Other meats, poultry, eggs, dairy products, fats and oils, fresh fruits, processed fruits and vegetables, sugar and sweets, cereals and bakery products, nonalcoholic beverages, and other foods, as well as the aggregate categories of all food; food away from home; food at home; meats, poultry, and fish; fruits and vegetables; and fresh fruits and vegetables, were all revised upward. Only the category of fresh veggies received a reduction.
In February 2022, there were significant rises in all-food, food-away-from-home, and food-at-home prices, following similar major changes in January. Rather than a few or a few food categories, these price increases were the result of increases across the board. While prices for all reported food price categories were unchanged in February, prices for 11 disaggregated food categories climbed by more than a percent. The effects of the Ukraine conflict and the Federal Reserve’s recent interest rate hikes are likely to put upward and downward pressure on food prices, respectively. The situations will be closely observed as they develop in order to assess the net effects of these concurrent developments on food prices. In 2022, all food prices are expected to rise between 4.5 and 5.5 percent; food prices away from home are expected to rise between 5.5 and 6.5 percent; and food prices at home are expected to rise between 3.0 and 4.0 percent.
With historically low frozen chicken stockpiles (also known as “cold storage”), retail poultry prices have been high. In February 2022, egg prices climbed by 2.2 percent. An ongoing outbreak of highly pathogenic avian influenza could lead to price rises in chicken and eggs due to limited supply, or price decreases due to decreasing international demand for U.S. poultry products or eggs. The impact of the outbreak on prices will be tracked in future Food Price Outlook reports. Poultry costs are now expected to rise by 6.0 to 7.0 percent, while egg prices are expected to rise by 2.5 to 3.5 percent.
Increases in retail prices have been driven by rapid increases in dairy product consumption in recent months. In February 2022, the trend continued with a 1.6 percent increase in retail dairy product prices. In 2022, dairy product prices are expected to rise by 4.0 to 5.0 percent.
Forecast ranges for fats and oils, fresh fruits, processed fruits and vegetables, sugars and sweets, cereals and bread items, nonalcoholic drinks, and other foods have been modified upwards following major price rises in January and February. Prices for fats and oils are expected to rise by 6.0 to 7.0 percent; fresh fruit prices are expected to rise by 5.0 to 6.0 percent; processed fruit and vegetable prices are expected to rise by 4.5 to 5.5 percent; sugar and sweets prices are expected to rise by 3.0 to 4.0 percent; cereals and bakery product prices are expected to rise by 3.0 to 4.0 percent; and nonalcoholic beverage prices are expected to rise by 3.0 to 4.0 percent. Fresh fruits and vegetables are expected to climb between 3.0 and 4.0 percent, while the aggregate categories of fruits and vegetables are expected to increase between 3.5 and 4.5 percent.
In February 2022, fresh vegetable prices remained unchanged, which was slower than predicted. Fresh vegetable costs are expected to rise between 1.0 and 2.0 percent, down from 1.5 to 2.5 percent previously.
A Producer Price Index (PPI) is similar to a Consumer Price Index (CPI) in that it tracks price changes over time. A PPI, on the other hand, is a measure of the average prices paid to domestic producers for their goods, rather than retail prices. Nearly every industry in the goods-producing sector of the economy has a PPI. Food markets are interested in three primary PPI commodity groups: unprocessed foods and feedstuffs (previously known as crude foods and feedstuffs), processed foods and feeds (formerly known as intermediate foods and feeds), and final consumer foods. These groupings provide a general notion of pricing variations in the US food supply chain at various levels of production.
The PPIs, which track changes in farm and wholesale prices, are often far more volatile than the CPIs that follow them. As products move from the farm through the wholesale sector to the retail sector, price volatility lessens. The CPI often lags moves in the PPI because to the various processing stages in the US food system. As a result, the PPI is a good tool for predicting what will happen to the CPI in the near future.
The USDA’s Economic Research Service does not anticipate PPIs for unprocessed, processed, or finished foods and feeds at the industry level. These costs, on the other hand, have historically had a high association with the CPIs for all foods and food at home.
PPI projection ranges for farm-level cattle, wholesale poultry, wholesale dairy, farm-level soybeans, wholesale fats and oils, farm-level fruits, farm-level vegetables, farm-level wheat, and wholesale wheat flour were revised upward this month. Wholesale beef forecast ranges have been lowered.
Cattle prices on farms increased 6.8% in February 2022, putting them 24.7 percent higher than they were in February 2021. Beef prices, on the other hand, fell by -2.9 percent. In 2022, farm-level cattle prices are expected to rise by 12.5 to 15.5 percent. Prices for wholesale beef are expected to rise by 4.0 to 7.0 percent.
In February 2022, wholesale poultry prices grew by 4.1 percent, totaling a 26.5 percent rise over February 2021 prices. Highly pathogenic avian influenza might put upward or downward pressure on chicken prices by reducing production or restricting access to foreign markets. In 2022, wholesale poultry prices are expected to rise by between 9.0 and 12.0%.
On robust domestic and international demand, wholesale dairy prices grew by 2.0 percent in February 2022. In 2022, wholesale dairy prices are expected to rise between 7.0 and 10.0 percent.
In February 2022, farm-level soybean and wholesale fats and oils prices both increased by 11.4 and 6.0 percent, respectively. Oil prices have risen due to low production and stocks around the world. In 2022, farm-level soybean prices are expected to rise by 8.5 to 11.5 percent. Prices for wholesale fats and oils are expected to rise by 27.0 to 30.0 percent.
In February, farm-level fruit prices jumped by 4.5 percent. In February 2022, farm-level vegetable prices fell 9.4%, but they were still 17.5% higher than in February 2021. In 2022, farm-level fruit prices are expected to rise by 12.5 to 15.5 percent, while farm-level vegetable prices are expected to rise by 6.0 to 9.0 percent.
In February 2022, farm-level wheat and wholesale wheat flour prices both climbed by 1.3 percent. International wheat markets are projected to be under pressure as a result of the situation in Ukraine. In 2022, farm-level wheat prices are expected to rise by 20.0 to 23.0 percent, while wholesale wheat flour prices are expected to rise by 12.0 to 15.0 percent.
See World Agricultural Supply and Demand Estimates at a Glance for official USDA farm-level price projections. See the USDA Economic Research Service Outlook publications on Livestock, Dairy, and Poultry, Oil Crops, Wheat, Fruit and Tree Nuts, and Vegetables and Pulses for more information, thorough explanations, and analysis of farm-level prices.
Is inflation a factor in food costs?
Over the last several months, you may have noticed a significant spike in the cost of a vehicle, food, or fuel. According to the latest data from the Bureau of Labor Statistics (BLS), gasoline prices have increased by 38% and energy prices have increased by 26% in the last year. Used vehicle costs have climbed by 41% this year, while new vehicle prices have increased by 12%. Food prices have also risen by 8% over the previous year.
However, the supply chain interruptions that are causing much of the current inflation will not endure indefinitely. Many experts, including the Federal Reserve Bank, believe that inflation is more transient than long-term. “In a lot of cases, these prices will actually decline” after supply chain concerns are resolved, says Dean Baker, senior economist at the Center for Economic and Policy Research, an economic policy think tank.
What may cause food price inflation?
- Inflation is the rate at which the price of goods and services in a given economy rises.
- Inflation occurs when prices rise as manufacturing expenses, such as raw materials and wages, rise.
- Inflation can result from an increase in demand for products and services, as people are ready to pay more for them.
- Some businesses benefit from inflation if they are able to charge higher prices for their products as a result of increased demand.
Does inflation affect the cost of groceries?
In January, the CPI for food-at-home increased by 1% over the previous month, a significant increase over the 0.4 percent increase in December. According to the BLS, the annual CPI on all items jumped 7.5 percent in January on an unadjusted basis, the highest pace of inflation in 40 years.
What impact does inflation have on grocery stores?
Inflation continues to wreak havoc on grocery retailers in the United States. Grocery prices rose 7.4% in January compared to the same month the previous year, the fastest increase since 2008.
However, not all foods have been affected equally by inflation. Potatoes, cheese, tea, tomatoes, spaghetti, bread, ice cream, and fresh, processed, and frozen veggies are among the pantry staples that have remained stable.
What influences food prices?
Many factors influence food costs in the short term, making them volatile. Supply and demand, weather, disease outbreaks, conflict, and natural disasters are all examples of these factors.
Do prices fall as a result of inflation?
The consumer price index for January will be released on Thursday, and it is expected to be another red-flag rating.
As you and your wallet may recall, December witnessed the greatest year-over-year increase since 1982, at 7%. As we’ve heard, supply chain or transportation concerns, as well as pandemic-related issues, are some of the factors pushing increasing prices. Which raises the question of whether prices will fall after those issues are overcome.
The answer is a resounding nay. Prices are unlikely to fall for most items, such as restaurant meals, clothing, or a new washer and dryer.
“When someone realizes that their business’s costs are too high and it’s become unprofitable, they’re quick to identify that and raise prices,” said Laura Veldkamp, a finance professor at Columbia Business School. “However, it’s rare to hear someone complain, ‘Gosh, I’m making too much money.'” To fix that situation, I’d best lower those prices.'”
When firms’ own costs rise, they may be forced to raise prices. That has undoubtedly occurred.
“Most small-business owners are having to absorb those additional prices in compensation costs for their supplies and inventory products,” Holly Wade, the National Federation of Independent Business’s research director, said.
But there’s also inflation caused by supply shortages and demand floods, which we’re experiencing right now. Because of a chip scarcity, for example, only a limited number of cars may be produced. We’ve seen spikes in demand for products like toilet paper and houses. And, in general, people are spending their money on things other than trips.
What impact do rising food costs have on the economy?
Although food costs had risen for seven months in a row by February 2011, not all goods had increased at the same rate (see Figure 1). This distinguishes the current scenario from the price spikes in 2008, when food riots erupted across the poor globe, according to the World Bank’s Food Price Watch. Over the last year, meat costs have remained rather steady. Following good harvests in exporting countries, the global price of rice was actually lower at the end of 2010 than it had been at the start of the year, and it is still 70% below its 2008 high. As a result, rice is a more affordable alternative grain for the poor, and its availability has kept more people out of poverty and malnutrition. Rice prices have risen dramatically in some Asian economies at the same time. Domestic rice prices in Vietnam, Bangladesh, and Indonesia, all of which use a lot of rice, have risen by more than 30% in the last year. 5
The poor in emerging countries are disproportionately affected by rising food prices. This is particularly true in areas where individuals spend the majority of their income on food and rely on a single food item. Although increased prices assist certain farmers and food producers, the net consequence of increasing prices is an increase in the number of poor people. According to the World Bank, rising food costs have pushed an additional 44 million people into poverty in developing countries. After a temporary drop to 925 million in 2010, the number of chronically hungry people began to rise again (see Figure 2). “The tendencies toward the 1 billion are worrying,” says Zoellick. Food prices have risen to dangerously high levels, putting tens of millions of poor people around the world in jeopardy.” 6
What consequences does inflation have?
Inflation lowers your purchasing power by raising prices. Pensions, savings, and Treasury notes all lose value as a result of inflation. Real estate and collectibles, for example, frequently stay up with inflation. Loans with variable interest rates rise when inflation rises.
What effect does increased food prices have?
The worldwide food price spikes in 2007-2008 wrecked devastation on millions of households, sparked political turmoil, and helped to reverse governments’ complacency in the face of unacceptably high levels of chronic hunger1. Of course, not all countries or impoverished households suffered equally at the time, and other countries, particularly India, were able to largely buffer domestic food prices from the significant rise in world prices. Following worldwide food price decreases in 2009, even higher and more unpredictable prices have resurfaced, with substantial food inflation in India and China, which did not exist in 2007-20082. As previously, the impact of high prices on food and nutrition security is disproportionately felt by those who can least afford it. Food and nutrition security can be harmed by rising food prices, as well as other shocks like as drought, floods, and economic crises, which drive the poorest households deeper into poverty and make it more difficult for them to get appropriate food. These problems might lead impoverished families to sell possessions or neglect other necessities, trapping them in a long-term poverty cycle that becomes increasingly difficult to break. Even a temporary deterioration in diet, especially for youngsters, can have long-term consequences.
On the other hand, lack of investment in agriculture and insufficient attention to food and nutrition security issues, as well as the hardship of small-scale farmers, especially in agro-ecologically poor areas, has been a background component in high and unpredictable food prices. This absence was exacerbated by low and declining agricultural prices, whereas high prices can boost farmer incomes, strengthen rural economies, create jobs, and assist raise rural wages. Around three-fifths of the world’s poor work in agriculture, and another one-fifth works in agriculture-dependent rural non-farm jobs, thus the long-term impact of high prices on food and nutrition security should not be overlooked2. However, the long-term benefits of high pricing are contingent on whether adequate policies and infrastructure are in place to ensure that the rural poor gain.
Progress toward achieving the Millennium Development Goal (MDG) of halving chronic hunger has been woefully inadequate, with few notable exceptions around the world. While the task is daunting, there is no reason why we cannot achieve food security, ensuring that all people have access to sufficient, safe, and nutritious food at all times. For the poor, high and unpredictable prices make life much more difficult. As in the case of India, this could also encourage more investment in agriculture and lead to increased social safety net programs.
The enormous price rises in 2007-2008 changed things because the upheaval, particularly in metropolitan areas where media attention was easier to focus, prompted political leaders to understand the link between hunger and security and to pay attention to long-standing issues. It was a wake-up call, reigniting global concern about food and nutrition security. As a result of the experience and current instability surrounding increasing prices, more research and analysis of their causes and cures has been conducted. There has been a lot of study done on family and country vulnerability, looking at how high and unpredictable food prices might lead to more hunger and poverty. There’s also a lot we don’t know about the real impact of high pricing during the last four years, and what’s in store for the future. The purpose of this article is to give a quick review of some of the key issues about how high prices and price volatility affect poor people’s food security, what the impact has been, and what the future looks like. High food costs produce winners and losers, with immediate implications in the short term and long-term consequences, both positive and bad. A look at the factors that influence global effect could help us better understand how these forces play out in India.
India continues to play a critical role in global food and nutrition security. India is possibly the world’s largest food security puzzle, in addition to the magnitude of its food-insecure population. Despite its unrivaled household survey data and other data sources, it’s difficult to explain seemingly contradictory trends in high income growth and per capita expenditure, as well as reducing per capita calorie consumption and stagnant gains in nutritional improvements. As Deaton and Drze pointed out in their assessment of evidence on food intake and nutrition in India3, India has a greater rate of undernutrition than many other nations that are considerably poorer and have not achieved anywhere like the same degree of economic growth. While high food prices are simply one aspect, examining how food prices affect vulnerable households and the many effects this has had around the world may provide light on the challenges.
Will food costs rise in 2021?
Grocery costs had a poor year in 2021. According to the consumer price index, shoppers paid 6.4 percent more for food in November 2021 than in November 2020. All food costs were higher than usual, but meat prices were the most striking, with pork costing 14 percent more than a year ago and beef costing 20 percent more.