USDA did not alter its major food price inflation outlook in its forecast issued Thursday from levels in January, still forecasting overall food price inflation for 2021 2% to 3% overall, with food away from home (restaurant) prices also expected to rise 2% to 3%.
That would put overall food price inflation for 2021 in line with the 20-year average of 2.4% while the restaurant price rise the past 20 years has been 2.8%.
Food at home (grocery store) prices are looked to up be 1% to 2% in 2021, below the 20-year average of 2%, but well below the 2020 pandemic-influenced rise of 3.5% level. Both restaurant and overall food prices rose 3.4% in 2020.
Within the categories of food at the grocery store, USDA only adjusted its forecasts for fats and oils, now putting it at 1% to 2%, and sugar and sweets at 1.5% to 2.5%. That marks a sizable jump for fats and oils as USDA in January saw those prices unchanged — a range of down 0.5% to up 0.5%, while sugar and sweets were expected to rise 1% to 2% in last month's forecast.
But these mostly static forecasts may not remain that way as USDA cautioned “uncertainty about the effect of the pandemic on food prices remains largely unresolved.”
Whether their forecasts remain closer to the 20-year averages in 2021 than the levels seen in 2020 remains to be seen. But they are still elevated from the period leading up to the pandemic where food price increases at the grocery store were less than 1% in 2018 and 2019 and actually declined from the prior year in 2016 and 2017.