“Fresh Perspectives” is a new Winsight Grocery Business column from Executive Editor Russell Redman, who will share insights on news, trends, people, issues and events in and around the grocery industry.
From what I remember as an inflation child of the late 1970s and early 1980s, when prices go up, they generally don’t come back down—for food or whatever. Once pricing climbs to a certain level, it tends to stay there, not return to where it had been. The end result is more funds coming out of everybody’s wallets and purses going forward.
That’s why when I saw the U.S. Department of Agriculture’s latest “Food Price Outlook, 2023 and 2024,” marking its July forecast, I wasn’t as enthused as I might have been about the prospect of food prices decreases.
For 2024, the USDA projected overall food pricing—including food-at-home and food-away-from-home—to edge up 2.4%, but with a prediction interval of down 2.8% to up 7.9%.
The chance for a decrease (and increase) looks greater for food-at-home prices, which the USDA pegged at inching up 0.9% yet with a range of down 6.8% to up 9.3%. Meanwhile, an increase looks very likely for food-away-from-home pricing, forecast by the USDA to rise 6.1% in a range of up 3.7% to 8.6%. (And I’ve already been miffed about paying $15 or more for a fast-food meal.)
Speaking as a consumer, I’m keeping my fingers crossed but not holding my breath.
Indeed, the trend has been good heading into Thursday’s release of the July Consumer Price Index data. The CPI has declined steadily over the past 12 months, with inflation thus far in 2023 up 3% year over year for June, down from 4% in May, 4.9% in April, 5% in March, 6% in February and 6.4% in January. Likewise, grocery prices have continued to fall as the June food-at-home index rose just 4.7% annually, down from 5.8% in May, 7.1% in April, 8.4% in March, 10.2% in February and 11.3% in January.
But the reality is that prices haven’t been decreasing per se. They’ve just risen less, and the higher pricing level is still there (and likely to stay over time, to some degree).
According to the USDA, food prices grew 9.9% overall in 2022 and were up 11.4% for food-at-home and 7.7% for food-away-from-home. The department’s food pricing estimate for 2023 shows progress: up 5.8% overall, with a range of 5% to 6.6%. No decreases are expected. Food-at-home prices are predicted to rise 4.9% (range of 3.7% to 6.1%) for this year, while food-away-from-home pricing stands to increase 7.5% (range of 7% to 7.9%).
“Food prices are expected to grow more slowly in 2023 than in 2022 but still at above historical average rates,” the USDA said in its outlook report. “Food prices are expected to continue to decelerate but not decline in 2024.”
Let’s hope the trend stays in the “decelerate” lane and, maybe, that we’ll be surprised with some actual pricing decreases.