The rate of food price inflation for food at home has been revised down to 1.5% to 2.5% for 2016 from a prior outlook for grocery store prices to rise 2% to 3% in 2016 compared to 2015, according to USDA’s Economic Research Service (ERS). However, the overall level of food price inflation and the level for food away from home (restaurants) were kept the same at 2% to 3% and 2.5% to 3.5%, respectively.
Reductions were made to several categories for food at home or grocery store prices, primarily for meats, fish and poultry where those prices are seen up 1% to 2% from 2015, with downward adjustments to the increases for meats, poultry and fish and seafood. Meat was revised down to an increase up to 1% with that also the forecast range for pork price inflation in 2016, down from the prior mark.
“Due to an expectation of lower price inflation for pork, poultry, and fish and seafood, the meats forecast has been lowered,” ERS noted.
As for pork, ERS noted that following elevated prices in 2014 linked to the PEDv situation, prices in 2015 fell “as there were signs of industry expansion and a lower volume of pork exports due to the strength of the US dollar. This pattern has continued into 2016." ERS now predicts pork prices to increase up to 1% in 2016.
Poultry prices at the grocery store are now seen rising 1% to 2% in 2016 compared to 2015. ERS noted that trade interruptions related to the bird flu situation “resulted in more chicken broilers remaining on the US market which, in turn, places downward pressure on retail chicken prices. Chicken prices fell 0.1% from January to February and are 4% lower than they were at this time last year. Prices for other poultry, including turkey, were up 0.4% from January to February. ERS now forecasts poultry prices to increase 1% to 2% in 2016.”
USDA economists also offered the same cautions on their 2016 food price forecasts that they have previously – weather and crop output could alter the level of increase, that energy prices could impact the final results and a stronger U.S. dollar could weigh on the level of increase for food prices.