You can expect to shell out more to feed your family this year than you did in 2010.
The Agriculture Department (USDA) is projecting that the Consumer Price Index (CPI) for all food will rise two-to-three percent in 2011. Both food-at-home (grocery store) and food-away-from-home (restaurant) prices are expected to show the same increase.
Although food price inflation was relatively weak for most of 2009 and 2010, higher food commodity and energy prices have recently exerted pressure on wholesale and retail food prices. Hence, higher prices are projected to push inflation toward the historical average inflation rate of two-to-three percent in 2011.
The all-food CPI increased 0.8 percent between 2009 and 2010, the lowest food inflation rate since 1962. Food-at-home prices increased by 0.3 percent -- the lowest annual increase since 1967 -- with cereal and bakery prices declining 0.8 percent and processed fruit and vegetable prices dropping 1.3 percent, while food-away-from-home prices rose 1.3 percent in 2010, the lowest annual increase for restaurant prices since 1955.
December 2010 prices
The CPI for all food increased 0.1 percent from November to December 2010, was unchanged October to November 2010, and is now 1.5 percent above the December 2009 level.
The food-at-home CPI increased 0.2 percent in December 2010 and is up 1.7 percent from last December, while the food-away-from-home index was up 0.1 percent in December 2010 and is 1.3 percent above last December.
The all-items CPI was up 0.2 percent in December and is 1.5 percent above the December 2009 level.
Meat prices
Beef prices decreased 0.6 percent in December but are 6.1 percent above last December -- with steak prices up 5.4 percent and ground beef prices up 6.2 percent. Pork prices decreased 2.1 percent in December but are 11.2 percent above last December’s level. Poultry prices decreased 0.6 percent in December but are 1.3 percent above prices last year at this time, with chicken prices up 1.4 percent and other poultry prices (including turkey) up 0.9 percent.
As commodity prices and input costs have risen over the past six months, beef and pork prices are now significantly higher than in 2010. Increased inflation for beef and pork products is expected in the first half of 2011, as reflected in the Economic Research Service (ERS) forecasts -- beef prices are now projected to increase 2.5 to 3.5 percent and pork prices 3.5 to 4.5 percent in 2011.
Egg prices increased a mostly seasonal 5.1 percent in December (following a 10.6-percent increase in November), so that egg prices are 6.1 percent above the December 2009 level.
Dairy costs
Dairy prices were up 0.4 percent in December and are 3.7 percent above the December 2009 level. Within the dairy category, prices changed as follows in December: milk prices were up 0.5 percent and are 5.1 percent above last December’s prices; cheese prices were down 0.4 percent but are 4.3 percent above last December’s level; ice cream and related product prices were up 2 percent and are 2.6 percent above last December's level; and butter prices decreased 3.4 percent this month but are 21.9 percent above last December.
In 2009, dairy prices were up only 1.1 percent from 2009 (following a 6.4 percent decline from 2008 to 2009). However, higher projected prices for farm milk in 2011 will lead to increases of 4.5 to 5.5 percent for retail dairy products in 2011 based on current ERS forecasts.
Fresh fruits and vegetables
Fresh fruit prices increased 3.7 percent in December due to increases in other fresh fruit prices. The fresh fruit index is now up 3.1 percent overall from last year at this time, with apple prices up 3.8 percent, banana prices up 2.9 percent, citrus fruit prices up 9.1 percent, and other fresh fruit prices up 1.3 percent. Fresh fruit prices fell in 5 of the past 11 months, leading to an overall fresh fruit price decline of 0.6 percent in 2010. However, recent price increases imply that fruit prices will return to positive inflation rates in 2011.
The fresh vegetable index increased 2.5 percent in December. Since last year at this time, fresh vegetable prices are up 1.2 percent, with potato prices up 5.4 percent, lettuce prices down 7.4 percent, tomato prices down 10.5 percent, and other fresh vegetable prices up 6.9 percent. Processed fruit and vegetable prices increased 1.3 percent in December (the fourth monthly increase in the past 11 months) and are 1 percent below the December 2009 level.
Cereal and bakery
Cereal and bakery product prices were up 0.3 percent from November to December 2010 but are down 0.2 percent from last year at this time, with bread prices up 1.1 percent and breakfast cereal prices down 1.3 percent over the past year. Although cereal and bakery product prices declined 0.8 percent overall in 2010, higher wheat commodity costs should begin to affect cereal and bakery product prices over the next few months, causing prices to rise 2 to 3 percent overall in 2011.
Miscellaneous items
Sugar and sweets prices were up 1.3 percent in December and are 2.2 percent above last December. Within the nonalcoholic beverages category, prices changed as follows in December: carbonated drink prices were down 2.8 percent and are down 1.5 percent from December 2009; coffee prices were down 2.6 percent but are up 2.5 percent from last December; and nonfrozen noncarbonated juices and drinks prices were down 0.2 percent in December and are 2.2 percent below the December 2009 level.
