USDA raises food inflation forecast

The inflation forecast for food has been raised by the U.S. Department of Agriculture.

Many food prices have been relatively slow to retreat from the highs reached due to the pandemic, the USDA said, so some inflation forecasts were revised upward in the agency’s Nov. 23 food price forecast.

For 2020, the USDA said food prices at grocery stores are expected to increase between 3% and 4% compared with 2019, up from a 0.9% increase last year.

From January through October, the USDA said grocery prices for food increased 3.4% and restaurant prices rose 3%.

Among retail food price trends, the USDA said beef/veal has had the greatest relative price increase so far this year at 10%. Fresh fruits have had the largest relative price decrease at 1%.

The USDA said the retail price of fresh vegetables increased 1.1% from September to October, making the retail price of fresh vegetables 4.2% higher than in October last year.

The USDA said the price spike from September to October was mostly driven by a 7.2% increase in the price of fresh lettuce over the same period. With the bump in lettuce prices, the index price of fresh vegetables is now forecast to rise between 2% and 3% in 2020. 

“The price increase in vegetables is predicted to drive an increase in the category of fresh fruits and vegetables between 0.5% and 1.5% in 2020, despite price decreases in fresh fruit,” the report said.

The forecast for food bought at restaurants also was revised upward, the USDA said, to between 2.5% and 3.5%. Price increases for food at restaurants this year average 3%, the USDA said, slightly higher than the 20-year historical average of 2.8%.