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CCFB News» April 2019

Food Price Outlook 2019Food price inflation to remain low in 2019

04/04/2019 @ 12:00 pm | By by Daniel Grant, FarmWeekNow

Grocery bill increases have stayed lower than inflation in other sectors for the past 10 years, and rising ag productivity is a big part of the reason.


USDA Economist Annemarie Kuhns says retail prices for beef could rise 2-3 percent this year. (Illinois Farm Bureau file photo)



Grocery shoppers likely won’t see much change in food prices this year, according to USDA’s latest food price outlook.But it could be a little different story for those who like to dine at restaurants.


The Ag Department projects the price of food at home could inch 1 to 2 percent higher this year, led by a possible 2 to 3 percent increase in beef, dairy and fresh fruit prices.


“That’s still below the 20-year average of 2 percent (inflation),” Annemarie Kuhns, economist with USDA’s Economic Research Service food markets branch, said at the 95th annual Ag Outlook Forum in Arlington, Virginia.


This follows a marginal increase in food prices last year of just 0.4 percent. Prior to that, average U.S. food prices actually declined by 1.3 percent in 2016 and by 0.2 percent in 2017.


“It marked the first time in nearly 50 years grocery prices deflated,” Kuhns said. The decrease was driven by “large increases in production, lower fuel costs and a favorable exchange rate.”


Farmers once again receive much of the credit for holding the line on food prices as many harvested large and even record crop yields in 2018.


Meanwhile, USDA projects output of meat and poultry this year could reach a record 105 billion pounds.

The run of low food prices more than offsets an increase a decade ago, when food price inflation totaled 6.4 percent in 2008.


“Food price inflation has been lower than economywide inflation the last 10 years,” Kuhns said.


Food price inflation the past decade totaled 16.3 percent, below inflation of 17.5 percent for transportation, 19.1 percent for housing and 29 percent for medical care during the same stretch.


One of the most volatile food price categories, eggs, could decrease 4 to 5 percent this year after a 10.8 percent increase in 2018. That followed a 30 percent decrease in egg prices in 2016-17.


“Eggs tend to be the most volatile,” Kuhns said. “But egg prices also have a small impact on consumers’ pocketbooks.”


Food prices are also influenced by location and food-buying habits. St. Louis had the highest food price inflation nationwide the last 10 years at 1.7 percent, while Dallas had the lowest inflation rate of 0.6 percent.


Those who eat out likely will see a slightly higher inflation rate. Inflation for food away from home averaged 2.6 percent in 2016, 2.3 percent in 2017 and 2.6 percent last year.


“In 2009, we started to see restaurant prices grow at a quicker rate than grocery store prices,” Kuhns noted.

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