USDA Maintains 2017 Food Price Forecasts

No shift in outlook even as grocery store prices remain under year-ago levels

Consumers are expected to see supermarket prices in 2017 steady to 1 percent higher than 2016 when they fell for the first time since 1967, according to USDA’s Food Price Outlook. Link to Excel spreadsheet.

Even as poultry, fish and seafood and dairy prices are forecast to decline in 2017 compared to 2016, USDA said they are holding their food price forecast for food at from home (grocery store) prices steady. USDA also left their forecast for food away from home (restaurant) prices at a rise of 2 percent to 3 percent compared to 2016. The standard “cautions” on weather and currencies potentially impacting the food price situation are included by USDA.

USDA did further reduce its outlook for egg prices, forecasting a fall of 5 percent to 6 percent after they dropped 21.1 percent in 2016. USDA also expects dairy product prices will rise 0.5 to 1.5 percent, a trim from their prior outlook. Plus, processed fruits and vegetable prices are seen steady (down 0.5 percent to up 0.5 percent) compared to 2016.

Overall, USDA expects food prices will increase 1 percent to 2 percent in 2017, a below-average rise as the 20-year average for overall food inflation at the consumer level is 2.5 percent.

But food prices at the grocery store remain under year-ago levels, with May 2017 prices 0.2 percent below May 2016, USDA noted, while restaurant prices are up 2.3 percent and overall food prices are up 0.9 percent.

Comments: This is still not contributing a great deal to the overall inflation situation, especially with energy prices downtrending on the recent fall in oil prices. And for consumers, grocery store prices still are providing them with more spending power, with the year-to-date grocery store prices down 0.3 percent compared to this point in 2016. Volatility in food prices, however, is not uncommon and why the core rate of inflation remains a closer watched item than the “headline” figure.