Food Price Outlook, 2008
In 2008, the Consumer Price Index (CPI) for all food is projected
to increase 5.0 to 6.0 percent, as retailers continue to pass
on higher commodity and energy costs to consumers in the form
of higher retail prices. The main factors behind higher food commodity
costs include stronger global demand for food, increased U.S.
agricultural exports resulting from stronger demand and a weaker
dollar, weather-related production problems in some areas of the
world, and the increased use of some food commodities, such as
corn, for bioenergy uses.
Food-at-home prices are forecast to increase 5.5 to 6.5 percent,
while food-away-from-home prices are forecast to increase 3.5
to 4.5 percent in 2008. The all-food CPI increased 4.0 percent
between 2006 and 2007, the highest annual increase since 1990.
Food-at-home prices, led by eggs, dairy, and poultry prices, increased
4.2 percent, while food-away-from-home prices rose 3.6 percent
in 2007.
See
ERS data on CPI for food and CPI forecasts
July 2008 Prices
The CPI for all food increased 1 percent from June to July 2008,
0.6 percent from May to June, and is now 6.0 percent higher than
the July 2007 level. The food-at-home index increased 1.2 percent
in July and is now 7.1 percent above last July, while the food-away-from-home
index increased 0.6 percent and is now 4.6 percent above last
July. The all-items CPI increased 0.5 percent and is currently
5.6 percent above the July 2007 level.
Beef prices increased 0.8 percent in July and
are 4.6 percent above last July, as higher energy and feed costs
continue to increase beef prices. Pork
prices jumped 1.7 percent in July and are now 1.4 percent above
last July’s level, as year-over-year pork prices have begun
to rise due to higher feed and energy costs. Poultry
prices increased 1 percent in July and are up 3.5 percent from
last year at this time. Higher feed and energy costs in 2007 and
early 2008 have caused poultry prices to rise faster than normal
over the past 18 months.
Egg prices increased 2.3 percent in July and
are now 16.3 percent above the July 2007 level.
Dairy prices were up 2.3 percent in July and
are up 8.1 percent from the July 2007 level. Within the dairy
category, prices changed as follows in June: milk
prices were up 4.3 percent and are 4.8 percent above last July’s
prices; cheese prices were up 3.1 percent and
are 14.5 percent above last July’s level; ice cream
and related product prices declined a completely seasonal 1.2
percent but are still 4.2 percent above last July; and butter
prices increased 3.3 percent and are 5.8 percent above last July.
Fresh fruit prices decreased 0.7 percent in
July, largely due to a completely seasonal 5.1-percent decrease
in other fresh fruit prices, while apple prices were up 5.1 percent
and citrus fruit prices up 2.9 percent. The fresh fruit index
is now up 8.4 percent overall from last year at this time, with
apple prices up 12.7 percent, banana prices up 20 percent, and
citrus fruit prices up 2.4 percent. The fresh vegetable
index increased 2.1 percent in July, mostly due to an 11.5-percent
increase in potato prices. Since last year at this time, fresh
vegetable prices are up 12 percent, with lettuce prices up 8.6
percent, tomato prices up 18.7 percent, potato prices up 17.8
percent, and other fresh vegetable prices up 8.5 percent.
Cereals and bakery product prices increased
1.9 percent from June to July 2008 (the sixth monthly increase
of 1-percent or higher in the past 7 months), with rice prices
up 8.1 percent and breakfast cereal prices up 1.8 percent. Overall,
cereals and bakery product prices are up 12.1 percent from last
year at this time as higher wheat, corn, and energy prices have
pushed production costs for these products up sharply over the
past few months. Sugar and sweets prices were
up 0.8 percent in July and are 5.0 percent above last July. Within
the nonalcoholic beverages category, prices changed as follows
in June: carbonated drink prices were up 0.4
percent and are up 3.0 percent from July 2007; coffee
prices increased 1.1 percent and are 7.7 percent higher than last
July; and nonfrozen noncarbonated juices and drinks
prices were up 1.3 percent in July and are 4.4 percent above the
July 2007 level.
Background on the CPI for
Food
Although ERS analyzes changes in retail prices
for individual food items, sometimes it is useful
to record and analyze a measure of change for the
overall level of food prices.
The Consumer Price Index (CPI) is the most publicized
and most widely used measure of the general level
of prices in the U.S. economy. The CPI is a composite
measure of the level of average prices paid by urban
consumers for a defined market basket of goods and
services, including food.
The CPI for food at home is a component of the
full CPI and is the principal indicator of changes
in retail food prices. Policymakers, both public
and private, closely follow the CPI for food consumed
at home and its changes, which measure price inflation
for food items. The CPI for food consumed at home
also affects policy evaluation because the effects
of many current and proposed policies are evaluated
based on CPI measures. To contribute to the analysis
of government and commercial decisionmakers, ERS
estimates the future direction of changes in the
CPI for all food, food at home, and food away from
home (see data on the CPI
for food forecasts).
The food price level can be influenced by changes
in costs incurred by food system firms. Changes
in input costs can translate directly into changes
in the CPI or may have little or no effect. Researchers
at ERS not only produce forecasts of the CPI but
also analyze the impact of economic factors on changes
in the CPI, including changes in firms' costs. |
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