Food Price Outlook, 2023
This page summarizes the January 2023 forecasts, which incorporate the December 2022 Consumer Price Index and Producer Price Index numbers.
See Changes in Food Price Indexes, 2020 through 2023 for data files.
Note: The Food Price Outlook data series and forecasting methodology were revised in January 2023 based on the approach documented in the following report. As of January 2023, the Food Price Outlook Summary Findings are based on the revised data series. Forecasts using the prior forecasting methodology remain available as data files (“Legacy Data”). ERS will continue to produce new monthly forecasts using both the updated methods and the legacy methods through June 2023.Time-Series Methods for Forecasting and Modeling Uncertainty in the Food Price Outlook
The all-items Consumer Price Index (CPI), a measure of economy-wide inflation, decreased by 0.3 percent from November 2022 to December 2022 and was up 6.5 percent from December 2021. The CPI for all food increased 0.3 percent from November 2022 to December 2022, and food prices were 10.4 percent higher than in December 2021.
The level of food price inflation varies depending on whether the food was purchased for consumption at home or away from home:
- The food-at-home (grocery store or supermarket food purchases) CPI increased 0.3 percent from November 2022 to December 2022 and was 11.8 percent higher than December 2021; and
- The food-away-from-home (restaurant purchases) CPI increased 0.4 percent in December 2022 and was 8.3 percent higher than December 2021.
In 2022, food prices increased by 9.9 percent. Food-at-home prices increased by 11.4 percent, while food-away-from-home prices increased by 7.7 percent. All food price categories tracked by the U.S. Department of Agriculture (USDA), Economic Research Service (ERS) increased by more than 5 percent. Following an outbreak of Highly Pathogenic Avian Influenza (HPAI), egg prices had the largest price increase (32.2 percent) of any category tracked by ERS between 2021 and 2022. Beef and veal prices increased the least (5.3 percent) between 2021 and 2022 and generally declined from peak prices in November 2021. Eleven food-price categories increased by more than 10 percent, including fats and oils (18.5 percent), poultry (14.6 percent), other meats (14.2 percent), cereals and bakery products (13.0 percent), other foods (12.7 percent), dairy products (12.0 percent), processed fruits and vegetables (12.0 percent), nonalcoholic beverages (11.0 percent), and sugar and sweets (10.4 percent). All food categories grew faster than their historical average rate, and the 20-year average inflation rate increased for all food categories.
Food prices are expected to grow more slowly in 2023 than in 2022 but still at above historical average rates. In 2023, all food prices are predicted to increase 7.1 percent, with a prediction interval of 4.2 to 10.1 percent. Food-at-home prices are predicted to increase 8.0 percent, with a prediction interval of 4.5 to 11.7 percent. Food-away-from-home prices are predicted to increase 8.2 percent, with a prediction interval of 6.7 to 9.7 percent.
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 prices in 2020.
CPI Forecast Changes This Month
The primary forecasting methodology used in the USDA Food Price Outlook changed between December 2022 and January 2023. Data using legacy methods will continue to be published alongside the primary methods but will not be reported in the Summary Findings. The updated primary methods are based entirely on statistical models that are fitted to recent trends in the data. These methods provide wider initial prediction intervals that narrow over the forecast period as more data become available and the degree of uncertainty declines. Discussions of price changes will focus on the midpoint of these forecast intervals (titled “Mid” in the workbooks) and use the lower and upper bounds of a 95-percent prediction interval (based on past data, the 2023 level of inflation is expected to fall in this interval 19 out of 20 times) to reflect the level of uncertainty (titled “Lower” and “Upper” in the workbooks, respectively).
The increases in all-food and food-at-home prices continued to slow in December, with year-over-year price increases in all food, food at home, and food away from home continuing to decline. Prices increased for nine food-at-home categories between November and December 2022. Prices declined or remained constant for six food categories within meats, poultry, and fish or fruits and vegetables. The continuing increases in the Federal funds (interest) rate by the Federal Reserve place downward pressure on prices, and prices for unprocessed agricultural commodities have decreased each month since peaking in May 2022. The effects of these conditions will be closely monitored as they unfold to assess their impacts on food prices.
Retail egg prices increased 11.1 percent in December 2022 and reached 59.9 percent above December 2021 prices. The ongoing outbreak of HPAI continues to reduce the U.S. egg-layer flock, as well as the poultry flock to a lesser extent. This decrease is expected to increase wholesale and retail egg prices for the coming months. The HPAI outbreak has contributed to elevated egg and poultry prices as over 57 million birds, 300 commercial flocks, and 47 States have been affected. Price impacts of the outbreak will be monitored closely. Egg prices are predicted to increase 27.3 percent in 2023, with a prediction interval of 6.9 to 52.0 percent. This wide prediction interval reflects the volatility in retail egg prices.
Prices are expected to continue increasing for eight additional food categories that experienced consistent growth throughout 2022. In 2023, prices are predicted to increase for other meats (12.8 percent), dairy products (8.0 percent), fats and oils (16.5 percent), processed fruits and vegetables (9.6 percent), sugar and sweets (10.6 percent), cereals and bakery products (12.0 percent), nonalcoholic beverages (8.7 percent), and other foods (6.8 percent). The prediction intervals of each of these categories is strictly above zero.
Price decreases are expected for three price categories. Beef and veal prices are predicted to decrease 1.8 percent in 2023, with a prediction interval of -10.4 to 8.0 percent; pork prices are predicted to decrease 3.0 percent, with a prediction interval of -10.3 to 5.1 percent; and fresh fruit prices are predicted to decrease 1.7 percent, with a prediction interval of -7.5 to 4.5 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
Greater volatility in farm- and wholesale-level prices lead to much wider initial prediction intervals for each of these products. All prediction intervals include zero except wholesale poultry, indicating significant uncertainty about price increases or decreases in 2023. The midpoint (representing the expected price change in 2023) of eight PPI categories' prediction intervals are negative and five are positive.
Wholesale poultry prices decreased by 9.6 percent in December 2022 following a 10.9-percent decrease in October 2022. Strong production, increasing supplies, and changing trade patterns generally drove poultry prices down in the final quarter of 2022, despite the ongoing outbreak of HPAI. Farm-level egg prices jumped 30.2 percent in December, following a 19.6 percent increase in November, and were 248.1 percent higher than December 2021. HPAI continues to affect the egg-layer flock. Wholesale poultry prices are predicted to decrease 12.1 percent in 2022. Farm-level egg prices are predicted to decrease 13.4 percent, with a prediction interval of -49.1 to 51.4. Egg prices are the most volatile category tracked by ERS, leading to a wide initial prediction interval.
Farm-level wheat prices increased by 31.0 percent in 2022 but decreased 7.2 percent in December. Farm-level wheat prices are predicted to decrease 11.5 percent in 2023.
For official USDA farm-level price forecasts, see: World Agricultural Supply and Demand Estimates at a Glance. For additional information, detailed explanations, and analyses of farm-level prices, see USDA Economic Research Service Outlook publications including Livestock, Dairy, and Poultry, Oil Crops, Wheat, Fruit and Tree Nuts, and Vegetables and Pulses.
See Changes in Food Price Indexes, 2020 through 2023 for data files.