ERS’ Food Price Outlook forecasts enhanced with midpoints and prediction intervals

USDA, Economic Research Service (ERS) publishes price forecasts in the monthly Food Price Outlook (FPO) data product. The FPO forecasts food-at-home (FAH) prices will increase 8.6 percent in 2023, with a prediction interval of 5.6 to 11.8 percent. ERS updated the FPO forecasting methods in January 2023, and forecasts now include a midpoint and a prediction interval to represent the expected price change and range of likely price changes, respectively. The prediction interval conveys uncertainty about the forecast, starting out wider at the beginning of the year and narrowing as forecasts incorporate more months of observed data and the forecast period shortens. The prediction intervals vary in size across food categories based on price volatility and available information. In 2023, egg prices are forecast to grow the fastest (37.8 percent, with a prediction interval of 18.3 to 62.3 percent) while fresh fruit prices are predicted to experience little change (0.1 percent) and have a prediction interval of -5.6 to 6.4 percent. In general, food prices are expected to grow more slowly in 2023 than in 2022 but remain above historical average rates. FAH prices grew 11.4 percent in 2022, the largest annual increase since 1974, compared with a historical annual average of 2.5 percent from 2003–22. This chart is updated from the Amber Waves article, ERS Refines Forecasting Methods in Food Price Outlook, published February 2023.