Food prices could rise as much as 10 percent this year, according to a new 2023 inflation report.
The U.S. Department of Agriculture Economic Research Service March 2023 report shows food prices are likely to grow more slowly in 2023 than last year but still at above-historical average rates.
A series of cold weather snaps in early 2022 reduced fruit and vegetable production in the U.S. But without extreme cold periods in early 2023, this year’s supply should increase, said Tony Banks, senior assistant director for Virginia Farm Bureau Federation’s Department of Agriculture, Development and Innovation.
“So, barring an unforeseen cause, prices should remain steady or slightly lower for fresh fruits and vegetables,” Banks said.
Following an outbreak of avian influenza, egg prices had a 32.2 percent price increase between 2021 and 2022 – the largest increase in any category tracked by ERS, the report said. Retail egg prices decreased 6.7 percent in February 2023 but remained 55.4 percent above February 2022 prices. Egg prices are predicted to increase another 29.6 percent in 2023.
“The volatility in egg prices is largely driven by continued incidence of HPAI in the U.S. and Canada, and it’s being exacerbated by the overall inflationary pressure,” Banks said. “So we’re not running out of eggs. Supply has tightened up, and markets are responding to fill temporary disruptions, which may have an effect on egg prices in the short run.”
The price of fats and oils, processed fruits and vegetables, and cereals and bakery products are predicted to have the largest increases this year. Prices for sugar and sweets, nonalcoholic beverages, other foods, dairy products, poultry and other meats also are forecast to increase.
“Prices for processed food are going to continue to increase, which is largely driven by increased energy and labor costs to process and distribute those items,” Banks said.
The report showed:
- The Consumer Price Index for all foods increased 0.4 percent from January to February and was 9.5 percent higher than in February 2022.
- All food prices are predicted to increase 7.5 percent this year.
- ERS also forecasts food-away-from-home prices will increase 0.5 percent higher than food-at-home, or grocery store, purchases.
- Prices increased for all food-at-home categories except fresh vegetables and eggs from January to February this year.
- Continuing increases in the Federal Reserve’s interest rate placed downward pressure on prices, and values for unprocessed agricultural commodities have decreased since peaking in May.
- Retail prices for fresh fruits and vegetables are predicted to continue their relatively slow growth from 2022.
To view the full report, visit ers.usda.gov.