The Consumer Price Index (CPI) for all food rose 0.2% from July to August and it now stands 1.4% above year-ago, according to USDA's Economic Research Service (ERS). It details:
- The food-at-home (grocery store food items) CPI increased 0.2% in August and is up 1% from year-ago.
- The food-away-from-home (restaurant purchases) CPI increased 0.2% in August and is up 2% from last August.
The all-items CPI rose 0.1% in August and is 1.5% above last year at this time. "The overall direction of food prices in 2013 continues to be mixed, and the food-at-home CPI is down 0.1% thus far in 2013. While there are no changes to the 2014 CPI forecasts, several forecasts for the remainder of 2013 have changed," ERS elaborates.
Based on current conditions, ERS's forecast for inflation in 2013 is for increases of 1.5% to 2.5% for all food prices, unchanged from its forecast last month. But ERS did lower its price forecast for food-at-home (grocery store food items) by 1 percentage point to 1%. This signals it expects prices to rise less than they did in 2012, and that annual inflation should be below the 20-year historical average of 2.8%.
"The impact of the 2012 drought on retail food prices has been less than initially forecast. The inflationary pressure of the drought has been offset by factors such as decreased exports of many U.S. agricultural products, a stronger U.S. dollar, low energy price inflation, and decreased prices for many commodities unaffected by the drought," ERS explains.
For 2014, ERS forecasts inflation of 2.5% to 3.5% for all food prices, unchanged from its August update. The food, food-at-home and food-away-from-home CPIs are all expected to increase 2.5% to 3.5% relative to 2013 levels, assuming normal weather conditions. This reflects ERS's belief that food price inflation will return to more historically normal level. "Inflationary pressures are expected to be moderate, given the outlook for commodity prices, animal inventories, and ongoing export trends," ERS elaborates.
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