USDA Downgrades 2016 All Food, Grocery Store Price Forecasts

U.S. consumers will see a smaller bill at the grocery store in 2016 compared to 2015 and overall food price increases are now seen at 1%, a range of 0.5% to 1.5%, according to the Food Prices update from USDA's Economic Research Service (ERS).Food at home or grocery store prices are now forecast to range between minus 0.75% to up 0.25%, Which ERS said is a "rate of inflation (or possibly deflation) that would again fall below the 20-year historical average of 2.5%. The forecast has been lowered due to recent declines in prices for beef and veal, poultry, and eggs. Lower transportation costs due to deflated oil prices as well as the strength of the US dollar have placed additional downward pressure on food prices in the first half of 2016."The U.S. dollar strength is impacting the competitiveness of U.S. goods on the global market, "leaving more potential exports on the domestic market," ERS noted.So far in 2016, ERS said grocery store prices are down 1.1% compared to this point in 2015. "Retail food prices have remained flat or decreased for seven of the first nine months in 2016," ERS detailed.For 2017, ERS now forecasts food prices to rise between 1% and 2%. "Despite the expectation for declining prices in 2016, beef and veal, poultry, and dairy prices are expected to rise in 2017," ERS said, adding their usual caveats that the forecasts for 2017 could be altered by several factors, including weather, energy prices and the value of the U.S. dollar.