A Day's Wages for a Loaf of Bread

Food Price Outlook 2010

USDA - In 2010, the Consumer Price Index (CPI) for all food is projected to increase 1.5 to 2.5 percent, with the same increase of 1.5 to 2.5 percent forecast for both food-at-home (grocery store) and food-away-from-home (restaurant) prices. Although global economies have recovered somewhat from the 2008-09 recession, world economic activity remains below pre-recession levels, resulting in overall food price inflation in 2010 remaining below historical averages.

The all-food CPI increased 1.8 percent between 2008 and 2009. Food-at-home prices increased by 0.5 percent—the lowest annual increase since 1967—with dairy prices declining 6.4 percent and fresh produce prices dropping 4.6 percent, while food-away-from-home prices rose 3.5 percent in 2009.

See ERS data on CPI for food and CPI forecasts

June 2010 Prices

The CPI for all food decreased 0.1 percent from May to June 2010, increased 0.1 percent from April to May 2010, and is now 0.7 percent above the June 2009 level. The food CPI has now returned to a positive annual growth rate, following 6 consecutive months—September 2009 to February 2010—of annual declines in food prices (a first since 1959). The food-at-home CPI was down 0.2 percent in June 2010 but is up 0.2 percent from last June, while the food-away-from-home index was up 0.1 percent in June 2010 and is 1.2 percent above last June. The all-items CPI decreased 0.1 percent in June, due mostly to a decrease in energy prices, and is 1.1 percent above the June 2009 level.

Beef prices increased 1.1 percent in June and are 4.4 percent above last June, as higher wholesale beef prices in April-May 2010 have started to pass through to retail beef prices. This increase has also caused an increase in the 2010 forecast for beef prices. Pork prices increased 1.9 percent in June and are 4.5 percent above last June’s level. Poultry prices increased 0.7 percent in June but are down 1.4 percent from last year at this time. For most of 2009, retail meat prices were lower than the previous year due to weak demand stemming from the global recession. However, as the overall economy began to recover from the recession, beef and pork commodity prices rose, and retail meat prices are now higher than in 2009. Increased inflation for most meat products in 2010 is a strong possibility, as reflected in ERS's updated forecasts for beef, pork, and other meats.

Egg prices increased 0.7 percent in June and are 1.4 percent above the June 2009 level.

Dairy prices increased 0.1 percent in June and are 1.9 percent above the June 2009 level. Within the dairy category, prices changed as follows in June: milk prices were up 1.8 percent and are 6 percent above last June’s prices; cheese prices were down 0.7 percent but are 0.8 percent above last June’s level; ice cream and related product prices were down 0.2 percent but are 0.2 percent below last June's level; and butter prices increased 0.5 percent this month and are 5.8 percent above last June. In 2009, dairy prices were down 6.4 percent from 2008 (the largest annual decrease since 1949), but higher projected prices for farm milk in 2010 will probably lead to increases of 1.5 to 2.5 percent for dairy products in 2010.

Fresh fruit prices decreased a mostly seasonal 2.7 percent in June due to decreases in other fresh fruit prices. The fresh fruit index is down 0.7 percent overall from last year at this time, with apple prices up 5.9 percent, banana prices down 7.2 percent, citrus fruit prices up 7.4 percent, and other fresh fruit prices down 3.4 percent. The fresh vegetable index decreased 3.3 percent in June due to decreases in tomato and other fresh vegetable prices. Since last year at this time, fresh vegetable prices are up 1.3 percent, with potato prices down 4.8 percent, lettuce prices up 3.5 percent, tomato prices down 3.1 percent, and other fresh vegetable prices up 4.4 percent. All fruit and vegetable forecasts for 2010 have been revised downward due to recent monthly changes in prices.

Cereals and bakery product prices decreased 0.4 percent from May to June 2010 and are down 1.1 percent from last year at this time, with white bread prices down 2.1 percent and flour prices down 5.3 percent over the past year. Sugar and sweets prices were down 1.2 percent in June but are 1.4 percent above last June. Within the nonalcoholic beverages category, prices changed as follows in June: carbonated drink prices were down 0.6 percent and are down 1.4 percent from June 2009; coffee prices were up 0.3 percent but are 1.5 percent below last June; and nonfrozen noncarbonated juices and drinks prices were down 0.3 percent in June and are 2.4 percent below the June 2009 level.

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