USDA food price inflation forecasts for 2022 have already reached a 14-year high and are expected to rise even more

The US Department of Agriculture predicts food price inflation already at a 14-year high. USDA forecasts for consumer food price inflation have been raised again this month, with all food prices now up 5-6%.  

USDA consumer food price inflation forecasts were raised again this month, with all food prices now up 5-6% (from 4.5% to 5.5% in March), while as the forecast for price growth in restaurants remained at the level of 5.5% to 6.5%.

On average over 20 years, food price increases are 2.4% for all food items, 2.9% for restaurant prices, and 2.0% for grocery store prices, meaning that the current projections are for costs that are both at least twice the average.

Changes from levels a month ago

The consumer price index (CPI) for all food products rose by 1% from February 2022 to March 2022, and food prices were 8.8% higher than in March 2021. Factors causing the increase in prices for food, according to the USDA, there will be upward pressure on prices due to the conflict in Ukraine, as well as downward pressure on prices due to the recent increase in interest rates by the Fed. "Situations will be closely monitored to assess the net impact of simultaneous events on food prices as they develop," the USDA said.

Impact of bird flu

The confirmation of highly pathogenic avian influenza (HPAI) in the US since the beginning of this year has had an impact, albeit a moderate one, on egg prices, according to the USDA. “Egg prices rose 1.9% in March 2022 after rising 2.2% in February,” said the USDA. "The ongoing outbreak of highly pathogenic avian influenza could drive up the price of poultry and eggs due to reduced supply, or prices could be lowered due to falling international demand for US poultry."

The USDA currently forecasts that egg prices will rise 6-7% in 2022 compared to 2021, which is a big jump from their forecast a month ago of 2.5% growth in egg prices. -3.5%. The USDA originally expected egg prices to fall by 0.5% in 2022.

MEAT, other price increase

While wholesale beef prices were down 3.6% in March 2022, the USDA noted that retail beef prices were up 1%. "Wholesale pork prices, along with port congestion, contributed to a 1.4% rise in retail pork prices in March 2022," the USDA said in a statement. Their forecast is that beef and veal prices will rise by 6-7% in 2022 (previously 3-4%), while pork prices will rise 4-5% (previously 3-4%).

The USDA originally expected beef, veal and pork prices to rise 2-3% in 2022. Retail poultry prices will increase by 7.5-8.5% in 2022 (up from 6-7% earlier) in part as inventory data point to historically low levels of frozen poultry stocks. The USDA originally expected poultry prices to rise 1-2% in 2022. 

More food price forecasts ahead

Given that m/m and y/y food price inflation has not abated, the USDA is expected to continue to raise its forecasts. In 2008, when food price inflation was last above the midpoint of the current forecast, the USDA raised its forecasts monthly in March, April, and May, with a final increase in August. 

For 2022, the USDA has already raised its price inflation forecast for all food items in February, March, and April.