USDA economists see food inflation cooling in 2023

Grocery inflation is hot now, but USDA economists are predicting a big chill in 2023.

Grocery food prices in September were up 13% compared with year-ago levels, according to the latest Food Price Outlook report from the USDA.

That was much higher than the all-items consumer inflation rate of 8.2% compared with a year ago, the USDA said.

All food prices were up 11.2% compared with a year ago, with the 13% grocery food inflation rate substantially higher than the 8.5% inflation rate for restaurant food, the report said.

The USDA said their latest estimate of overall food inflation in 2022 is in a range between 9.5% and 10.5%

Grocery food price inflation for 2022 is now predicted to increase between 11% and 12%, while restaurant food prices are now projected to increase between 7% and 8%.

Food prices are expected to grow more slowly in 2023 than in 2022, but at what the USDA said will be above historical average rates.

“In 2023, all food prices are predicted to increase between 3% and 4%, food-at-home prices are predicted to increase between 2.5% and 3.5%, and food-away-from-home (restaurant) prices are predicted to increase between 4% and 5%,” the report said.

The 2022 forecast inflation rate for retail fresh fruits and vegetables is now 6.5% to 7.5%, the report said. For 2023, the retail fresh produce inflation rate is forecast in a range from 0.5% lower to 0.5% higher.

The retail fresh fruit inflation rate is forecast at 8% to 9% for 2022 but in a range from 0.5% lower to 0.5% higher in 2023.

The 2022 retail fresh vegetable inflation rate is now forecast by the USDA in a range from 5.5% to 6.5%. The 2023 retail inflation rate for fresh vegetables is forecast in a range from 0.5% lower to 0.5% higher.

The USDA said farm-level vegetable prices in September were up a whopping 40.2% compared with September 2021. Farm-level vegetable prices are now predicted to increase between 25% and 28% in 2022, the USDA said.