Food Price Outlook,

Transcription

1 Provided By: Food Price Outlook, This page provides the following information for August 2017: Consumer Price Index (CPI) for Food (not seasonally adjusted) Producer Price Index (PPI) for Food (not seasonally adjusted) Consumer Price Index (CPI) for Food (not seasonally adjusted) The all-items Consumer Price Index (CPI), a measure of economy-wide inflation, was up 0.3 percent from July to August 2017 and is 1.9 percent above the August 2016 level. The CPI for all food rose 0.1 percent from July to August, and food prices were 1.1 percent higher than the August 2016 level. The degree 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 rose 0.3 percent in August and is 2.2 percent higher than August 2016; and The food-at-home (grocery store or supermarket food items) CPI was flat from July to August and is 0.3 percent higher than last August. Food-at-home prices and food-away-from-home prices have recently diverged. Restaurant prices have been rising consistently month-over-month due, in part, to differences in the cost structure of restaurants versus supermarkets or grocery stores. Prices at food-at-home outlets have posted lower year-over-year price increases. Restaurant prices primarily comprise labor and rental costs with only a small portion going toward food. For this reason, decreasing farm-level and wholesale food prices have had less of an impact on restaurant menu prices. ERS revises its food price forecasts if the conditions (such as the feed grain crop outlook or weatherrelated crop conditions) on which they are based change significantly. In 2017, supermarket prices are expected to change between and 0.75 percent. Despite declining prices in 2016, poultry, fish and seafood, and dairy prices are expected to rise in These forecasts are based on an assumption of normal weather conditions throughout the remainder of the year; however, severe weather or other unforeseen events could potentially drive up food prices beyond the current forecasts. In particular, drought or flood conditions throughout the U.S. could have large and lasting effects on fruit, vegetable, dairy, and egg prices. Also, a stronger U.S. dollar could continue to make the sale of domestic food products overseas more difficult. This would increase the supply of foods on the domestic market, placing downward pressure on retail food prices. Looking ahead to 2018, retail food prices are expected to rise between 1.0 to 2.0 percent. While fats and oils and processed fruits and vegetables could potentially decline in price, prices for meats, eggs,

2 and dairy are expected to increase. Due to deflation in 2016 and for over half of 2017, expected price increases would still leave overall price levels in 2018 lower than in Changes to Food Category CPI Forecasts The food-at-home CPI is an average of individual food CPIs, weighted by their relative importance or share of consumer expenditures. Egg prices increased 1.7 percent from July to August but are 3.7 percent below August 2016 levels. Retail egg prices are among the most volatile retail food prices, as they can be affected by seasonal demand. In 2017, more egg-laying birds and an increased number of eggs per hen has continued to place downward pressure on prices. ERS expects egg prices to decrease 9.0 to 8.0 percent in 2017 and decrease 1.0 to 0.0 Fats and oils prices are down 0.7 percent from July to August but are 1.3 percent higher than August In August, while aggregate butter and margarine prices rose, prices for other fats and oils, including peanut butter, fell 1.2 percent, and salad dressing prices fell 2.0 percent. ERS predicts fats and oils prices to increase between 0.0 to 1.0 percent in 2017 and to decrease 3.0 to 2.0 percent in Key Month-Over-Month Changes in the Food CPI Beef and veal prices decreased 0.7 percent from July to August and are 0.8 percent higher than this time last year. As of August 2017, the U.S. cattle herd has expanded to its largest size since August Relatively large cattle placements in feedlots in the first half of 2017, as well as more cattle available outside of feedlots, has increased the forecast for commercial beef production. This has resulted in downward pressure on prices throughout the cattle and beef complex. ERS predicts beef and veal prices to decrease 2.0 to 1.0 percent in 2017 but increase 1.0 to 2.0 In August, pork prices rose 1.4 percent from the previous month, and prices are 0.9 percent higher than in August Despite declining ham prices, bacon prices increased 2.7 percent and pork chop prices increased 2.0 percent in August. Lower beef prices are most likely adding pressure to lower pork prices. USDA forecasts a 4.9-percent increase in pork production in 2017, and large pork supplies are expected to change retail prices between -0.5 to 0.5 percent in 2017 but increase 1.5 to 2.5 Prices for poultry rose 0.2 percent from July to August and are 1.0 percent higher than last year. Despite high broiler production, many broilers have low weights which, along with larger birds demanding higher prices, has contributed to higher retail poultry prices. While prices are expected to increase at the retail level, price increases are still expected to be lower than the 20-year historical average of 2.1 percent. ERS predicts prices to rise between 0.5 and 1.5 percent in 2017 and to increase an additional 1.5 to 2.5 Prices for dairy products were flat in August and are 0.5 percent higher than they were in August Retail milk prices decreased 0.3 percent from July to August, cheese and related product prices rose 0.6 percent, and ice cream and related product prices increased 0.9 percent. Dairy imports have declined from relatively high levels in the first quarter of Dairy exports have strengthened and are expected to continue rising for products with high skim-milk content (for example, nonfat dry milk and whey products). Domestic demand for most dairy products has recently been below previous annual levels but is expected to recover during the year. ERS expects retail dairy

3 product prices to rise between 0.0 and 1.0 percent in 2017 and to increase an additional 1.5 to 2.5 Prices for fresh fruits were flat from July to August and are up 1.3 percent compared with August Despite falling prices for bananas and other fresh fruit, apple prices rose 3.0 percent, and citrus prices increased 0.2 percent since July. ERS expects fresh fruit prices to change between to 0.5 percent in 2017 and to increase 2.0 to 3.0 Fresh vegetable prices were also unchanged from July to August, but prices are still 2.1 percent higher than in August ERS expects fresh vegetable prices to decrease between 1.5 and 0.5 percent in 2017 but increase 0.0 to 1.0 Factors, such as a stronger U.S. dollar, low oil prices, and seasonal availability have placed downward pressure on retail fresh produce prices. In August, prices for cereals and bakery products increased 0.2 percent compared with the previous month but are 0.2 percent lower than they were in August Prices for bread rose 0.9 percent, and retail rice, pasta, and cornmeal prices increased 1.0 percent from July to August. While prices for cereals and bakery products were, on average, lower last month, farm-level wheat prices have been increasing as U.S. production has declined due to severe drought conditions affecting the Northern Plains. ERS expects cereals and bakery products prices to rise between 0.5 to 1.5 percent in 2017 and to increase 3.0 to 4.0 Prices for nonalcoholic beverages decreased 0.2 percent from July to August and are down 0.1 percent since August Carbonated beverage prices increased 0.5 percent from July to August, while prices for coffee fell 1.4 percent over the same period. ERS predicts nonalcoholic beverage prices to increase 0.0 to 1.0 in 2017 and an additional 0.0 to 1.0 Producer Price Index (PPI) for Food (not seasonally adjusted) The Producer Price Index (PPI) is similar to the CPI in that it measures price changes over time. However, instead of measuring changes in retail prices, the PPI measures the average change in prices paid to domestic producers for their output. The PPI collects data for nearly every industry in the goods-producing sector of the economy. Of particular interest to food markets are three major PPI commodity groups 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 the various stages of production in the U.S. food supply chain. The intermediate and final demand PPIs measures of changes in farm and wholesale prices are typically far more volatile than their counterparts in the CPI. Price volatility decreases as products move from the farm to the wholesale sector to the retail sector. Due to multiple stages of processing in U.S. food systems, the CPI typically lags movements in the PPI. Examining the PPI is thus a useful tool in understanding what may happen to the CPI in the near future. ERS does not currently forecast industry-level PPIs for unprocessed, processed, and finished foods and feeds, but these have historically shown a strong correlation with the all-food and food-at-home CPIs. Unprocessed foods and feeds posted a monthly decrease of 7.4 percent from July to August, prices for processed foods and feeds fell 0.7 percent, and finished consumer foods were down 0.9 percent over the same period. Inflationary pressures lessened for farm-level cattle and wholesale beef prices in 2016 and are expected to continue to be low in In August, cattle prices decreased 6.8 percent and are down

4 6.9 percent since this time last year. Wholesale beef prices decreased in August, falling 7.0 percent, and are down 5.0 percent from the previous year. ERS expects farm-level cattle prices to decline between 2.5 and 1.5 percent in 2017 and to decrease an additional 3.0 to 2.0 Wholesale beef prices are expected to decrease 2.0 to 1.0 percent in 2017 and to decrease 5.0 to 4.0 Wholesale pork prices fell 2.3 percent from July to August but are 7.1 percent higher than this time last year. Overall, pork production is higher, placing downward pressure on prices wholesale pork prices declined 2.1 percent in However, ERS predicts wholesale pork prices to increase 4.0 to 5.0 percent in 2017 and 2.5 to 3.5 Prices for farm-level eggs increased 3.2 percent from July to August. Price levels are 55.2 percent higher than August 2016 levels. Egg prices are among the most volatile of food prices, typically peaking in the fourth quarter of the year and then falling in the first quarter of the new year. In 2015, prices were also affected by the Highly Pathogenic Avian Influenza (HPAI), which reduced the count of table-egg-laying birds in many Midwestern and Pacific Northwestern States. ERS predicts farmlevel egg prices to increase 3.0 to 4.0 percent in 2017 and to increase an additional 2.5 to 3.5 percent in Farm-level soybean prices decreased 10.5 percent from July to August and are 9.7 percent below the August 2016 price level. Wholesale fats and oils prices decreased on the month, falling 1.9 percent in August, but are 2.6 percent higher than August 2016 price levels. Farm-level soybean prices are expected to change between -0.5 to 0.5 percent in 2017 and to rise 3.5 to 4.5 ERS expects prices for wholesale fats and oils to rise 4.0 to 5.0 percent in 2017 but to decrease 2.0 to 1.0 Farm-level fruit prices fell 4.5 percent in August but are 8.5 percent higher than in August Farm-level vegetable prices also fell in August, decreasing 0.7 percent. However, farm-level vegetable prices are still 7.3 percent higher than they were this time last year. Farm-level fruit prices are expected to increase 1.0 to 2.0 percent in 2017 but to decrease 7.5 to 6.5 Farmlevel vegetable prices are expected to decrease 2.0 to 1.0 percent in 2017 and to decrease an additional 8.0 to 7.0 Farm-level wheat prices declined 20.6 percent from July to August but are 15.7 percent higher than they were in August Farm-level price increases have also affected wholesale wheat flour prices, which fell 9.1 percent from July to August, but rose 6.6 percent since August ERS expects farm-level wheat prices to increase 10.0 to 11.0 percent in 2017 and an additional 15.0 to 16.0 Wholesale wheat flour prices are also expected to increase in 2017, but not to the same extent, and ERS forecasts a 2.0 to 3.0 percent increase in However, wholesale wheat flour prices are expected to decline 3.0 to 2.0 Last updated: Monday, September 25, 2017

5 Courtesy of: Changes in Food Price Indexes, 2015 through 2017 Item Consumer Price Indexes Relative importance 1 Percent Trend Line Sep 2016 to Month-to- Month Jul 2017 to Year-over- Year Aug 2016 to Year-to-Date Annual Annual 20-Year Forecast Forecast Historical Avg 2016 to Average Avg 2017 Percent change All food to to 2.5 Food away from home to to 3.0 Food at home to to 2.0 Meats, poultry, and fish to to 2.0 Meats to to 2.5 Beef and Veal to to 2.0 Pork to to 2.5 Other meats to to 2.0 Poultry to to 2.5 Fish and seafood to to 1.5 Eggs to to 0.0 Dairy products to to 2.5 Fats and oils to to -2.0 Fruits and vegetables to to 1.5 Fresh fruits & vegetables to to 2.0 Fresh fruits to to 3.0 Fresh vegetables to to 1.0 Processed fruits & vegetables* to to 0.5 Sugar and sweets to to 1.0 Cereals and bakery products to to 4.0 Nonalcoholic beverages to to 1.0 Other foods to to 1.25 Orange indicates an adjustment downward, and black indicates no change from last month's forecast. 1 BLS estimated expenditure shares, December Food prices represent approximately 13.7 percent of the total CPI. Note: The most recent forecast was published on September 25, *Annual data for processed fruits and vegetables are only available from This is a 18-year historical average. Source: Bureau of Labor Statistics' Consumer Price Index. Forecasts by Economic Research Service. [Contact: Annemarie Kuhns , amkuhns@ers.usda.gov or David Levin , david.levin@ers.usda.gov]