Consumer Price Index for Food (not seasonally adjusted)
The all-items Consumer Price Index (CPI), a measure of economy-wide inflation, increased by 0.9 percent from January 2022 to February 2022 before seasonal adjustment, up 7.9 percent from February 2021. The CPI for all food increased 1.0 percent from January 2022 to February 2022, and food prices were 7.9 percent higher than in February 2021.
The level of food price inflation varies depending on whether the food was purchased for consumption away from home or at home:
The food-away-from-home (restaurant purchases) CPI increased 0.4 percent in February 2022 and was 6.8 percent higher than January 2021; and the food-at-home (grocery store or supermarket food purchases) CPI increased 1.4 percent from January 2022 to February 2022 and was 8.6 percent higher than February 2021.
Food price increases are expected to be above the increases observed in 2020 and 2021. In 2022, food-at-home prices are predicted to increase between 3.0 and 4.0 percent, and food-away-from-home prices are predicted to increase between 5.5 and 6.5 percent. Price increases for food away from home are expected to exceed historical averages and the inflation rate in 2021.
Recent Historical Overview
Between the 1970s and early 2000s, food-at-home prices and food-away-from-home prices increased at similar rates. Since 2009, however, their rates of growth have mostly diverged; while food-at-home prices deflated in 2016 and 2017, monthly food-away-from-home prices have been rising consistently since then. The divergence is partly due to differences between the costs of serving prepared food at restaurants and retailing food in supermarkets and grocery stores.
In 2020, food-at-home prices increased 3.5 percent and food-away-from-home prices 3.4 percent. This convergence was largely driven by a rapid increase in food-at-home prices, while food-away-from-home price inflation remained within 0.3 percentage points of the 2019 inflation rate. The largest price increases were for meat categories: beef and veal prices increased by 9.6 percent, pork prices by 6.3 percent, and poultry prices by 5.6 percent. The only category to decrease in price in 2020 was fresh fruits, by 0.8 percent.
In 2021, food-at-home prices increased 3.5 percent and food-away-from-home prices increased 4.5 percent. The CPI for all food increased an average of 3.9 percent in 2021. Of all the CPI food-at-home categories tracked by the U.S. Department of Agriculture (USDA), Economic Research Service (ERS), the beef and veal category had the largest relative price increase (9.3 percent) and the fresh vegetables category the smallest (1.1 percent). No food categories decreased in price in 2021 compared with 2020.
CPI Forecast Changes This Month
The ranges for 11 food categories, as well as 6 aggregate categories, were revised upward this month. Forecast ranges for the categories 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 revised upward. Only the category of fresh vegetables was revised downward.
The large increases in all-food, food-away-from-home, and food-at-home prices in February 2022 followed similarly large changes in January. These aggregate price increases were the result of increases across many of the food categories rather than one or a few categories. While prices did not decrease for any reported food price category, prices for 11 disaggregate food categories increased by more than a percent in February.
The impacts of the conflict in Ukraine and the recent increases in interest rates by the Federal Reserve are expected to put upward and downward pressures on food prices, respectively. The situations will be closely monitored to assess the net impacts of these concurrent events on food prices as they unfold. All food prices are now predicted to increase between 4.5 and 5.5 percent; food-away-from-home prices are predicted to increase between 5.5 and 6.5 percent; and food-at-home prices are predicted to increase between 3.0 and 4.0 percent in 2022.
Following large price increases in January and February, forecast ranges for fats and oils, fresh fruits, processed fruits and vegetables, sugars and sweets, cereals and bakery products, nonalcoholic beverages, and other foods have been adjusted upward. Fats and oils prices are predicted to increase between 6.0 and 7.0 percent; fresh fruit prices are predicted to increase between 5.0 and 6.0 percent; processed fruit and vegetable prices are predicted to increase between 4.5 and 5.5 percent; sugar and sweets prices are predicted to increase between 3.0 and 4.0 percent; cereals and bakery product prices are predicted to increase between 3.0 and 4.0 percent; nonalcoholic beverage prices are predicted to increase between 3.5 and 4.5 percent; and other food prices are predicted to increase between 3.0 and 4.0 percent in 2022 compared with 2021. The aggregate categories of fruits and vegetables are predicted to increase between 3.5 and 4.5 percent and fresh fruits and vegetables are predicted to increase between 3.0 and 4.0 percent.
Fresh vegetable prices did not change in February 2022, which was slower than expected. Fresh vegetable prices are now predicted to increase between 1.0 and 2.0 percent, an adjustment downward from 1.5 to 2.5 percent.
Producer Price Index (PPI) for Food (not seasonally adjusted)
A Producer Price Index (PPI) resembles a CPI in that it reflects price changes over time. However, instead of retail prices, a PPI provides a measure of the average prices paid to domestic producers for their output. PPIs are reported for nearly every industry in the goods-producing sector of the economy.
Three major PPI commodity groups are of interest to food markets: unprocessed foodstuffs and feedstuffs (formerly called crude foodstuffs and feedstuffs), processed foods and feeds (formerly called intermediate foods and feeds), and finished consumer foods. These groups give a general sense of price movements across various stages of production in the U.S. food supply chain.
The PPIs—measures of changes in farm and wholesale prices—are typically far more volatile than the downstream CPIs. Price volatility decreases as products move from the farm to the wholesale sector to the retail sector. Because of multiple processing stages in the U.S. food system, the CPI typically lags movements in the PPI. The PPI is thus a useful tool for understanding what may soon happen to the CPI.
The USDA, Economic Research Service does not forecast industry-level PPIs for unprocessed, processed, and finished foods and feeds. However, these prices have historically shown a strong correlation with the all-food and food-at-home CPIs.
PPI Forecast Changes This Month
PPI forecast 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. Forecast ranges for wholesale beef were revised downward.
Farm-level fruit prices increased by 4.5 percent in February. Farm-level vegetable prices decreased by 9.4 percent in February 2022 but remained 17.5 percent above prices in February 2021. Farm-level fruit prices are now predicted to increase between 12.5 and 15.5 percent and farm-level vegetable prices are predicted to increase between 6.0 and 9.0 percent in 2022.
