The 9.9% food inflation rate of 2022 will be followed by a 7.1% rate this year, the highest rates in three decades, said USDA economists on Wednesday. Egg prices were forecast to rise 27% this year, on top of a 32% increase in 2022 due to bird flu outbreaks that began nearly a year ago and killed millions of egg-laying hens.
“Prices are expected to continue increasing for eight additional food categories that experienced consistent growth throughout 2022,” said the monthly Food Price Outlook. Fats and oils are forecast to climb by 16.5%, cereals and bakery products by 12%, and sugar and sweets by 10.6%, said the report.
The forecast of a 7.1% increase in food prices and an 8% rise for groceries was a steep step upward by USDA economists. It accompanied the adoption of a new approach, called the time-series econometric method, to forecasting, with the expectation of greater accuracy. A month ago, the USDA said an all-food increase of 4% was likely in 2023.
The USDA forecast that prices would fall this year for three food categories: beef, pork, and fresh fruit.
Meanwhile, two agricultural economists said market prices for crops and animals have increased faster in the past two decades than the rise in consumer food prices. This “suggests that farm prices are unlikely to moderate U.S. food inflation into the future,” wrote Carl Zulauf of Ohio State University and Gary Schnitkey of the University of Illinois in the farmdoc daily blog. From 1953 to 2000, farm prices generally rose more slowly than consumer food prices, indicating they had a calming effect on inflation.