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One question I’ve heard recently is: Is it possible that food prices are going to come back down, or are they going to stay at current levels (or higher)? For context on any precedent for a pullback in overall U.S. consumer food prices, we can look at the history of food prices (via the Consumer Price Index for Urban Consumers, or CPI-U, for food) back to the start of the U.S. Bureau of Labor Statistics data series in 1913.

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Bottom line, not since 1959 has there been a year-over-year decrease (of 1.7% that year) in the index aggregate for food prices in the United States (CPI-U for food). It seems highly unlikely, from my perspective, that without a drastic change in circumstances there would be an annual average decrease in this food price index this year or in the foreseeable future.

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Further, annual increases in food prices in the U.S. are the norm, and even increases of larger than 5% in the CPI-U for are not particularly rare in the CPI-U for Food, although they have been more rare in the last four decades.

 

Looking ahead, the July 2022 forecast from the USDA Economic Research Service is for an 8.5 to 9.5% increase in the price of all food in 2022, and a 2.5 to 3.5% increase in 2023, with increases in the price of food away from home continuing to outpace the increases in the price of food at home.  

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It's also relevant to note that changes in food prices come in the context of changes in prices of energy, transportation, consumer manufactured goods, wages, exchange rates, trade patterns, consumer preferences for food items, and a multitude of other factors. Further, the CPI-U for food is an aggregate that includes individual food items that have more annual variability. Still, for the average U.S. consumer thinking about their food expenditures, an overall decrease appears unlikely anytime soon.

--- 8/15/22