MORE LIKE THISearn moneyPay your billsPersonal economy
Updated March 12, 2024 to reflect the latest Consumer Price Index data.
Food prices have always been volatile, especially during the pandemic. Thanks to a combination of inflation, supply chain disruptions and tariffs on certain foreign imports, food prices have risen steadily since 2020.
Overall, prices are still rising. But inflation has been slowing over the past year, and the latest data shows that at least the price of groceries is no longer rising as quickly as it used to. In fact, food prices have largely moderated, most recentlyconsumer price index (CPI)appears, even though the costs of eating out continue to rise. And a few supermarket categories have even become cheaper, as they experiencedeflation.
Food prices — which include both food at home (groceries) and purchases at restaurants — rose 2.2% between February 2023 and February 2024, according to the CPI report released March 12 by the Bureau of Labor Statistics. In comparison, prices rose 9.5% from the previous one-year period in 2023.
The CPI uses indices to measure changes in the average cost of goods over a period of time. There are specific indexes for these items, including food costs.
These are the broad lines about food prices found in the latest report:
The index for food in the home is 1% higher year-on-year. From January to February,grocery costswere unchanged.
Restaurant guests still pay more (4.5%) for food than a year ago. And the price index rose 0.1% from January to February.
More specifically, limited-service meals (takeout only) increased 5.2% year-over-year, while full-service meals (restaurant within a restaurant) increased 3.8% year-over-year.
Overall, annual food inflation has been declining for more than a year.
"BUT: How is the economy?
How food prices have changed over time
Recent changes in food costs
Food prices do not move evenly. This is evident from the latest CPI figuresegg pricesrose 5.8% from January to February – the strongest single-month increase among supermarket groups, followed by the CPI. Egg prices have risen sharply for most of 2022 and 2023 due to bird flu. Despite the price increases in February, the price of eggs has fallen by 17% compared to a year ago.
The baby food and infant formula index saw one of the largest annual increases in the February report. Prices for these items are 8.8% higher than a year ago.
Will food prices fall in 2024?
Overall, food prices are expected to rise in 2024, albeit at a much slower pace than in 2023, according to the USDA Economic Research Service's food price outlook released in January.
Grocery prices may even fall slightly in the coming year, the USDA predicts, while the cost of dining out is likely to rise at a pace similar to the 5.2% increase in 2023.
The USDA relies on statistical models to predict future food prices. It updates its annual outlook monthly.
Stay up to date with investment news
A NerdWallet account is the smartest way to see the latest financial news and what it means for your wallet.
Why is food so expensive?
Food prices have risen steadily since 2020 thanks to a combination of factors such as inflation, labor costs, the supply chain and the war in Ukraine.
These challenges will not be resolved in 2024, but the economic outlook and headline inflation will improve.
Costs of food productionAccording to the U.S. Department of Agriculture, growth rates are expected to increase by 3.8% in 2024, which is slower than in 2023.
Working costAccording to the US, inflation is rising faster than inflation, but also slowing. Labor Statistics Bureau. This is an important underlying factor because of the way higher wages and benefits trickle down the entire supply chain.
Ukraine's food exportsremain lower than pre-war levels, but are increasing. According to the USDA's Foreign Agricultural Service, food exports from Ukraine, nicknamed the "breadbasket of Europe," have historically accounted for 9% of the global wheat market and 12% of the corn market.
According to the USDA, supply of other global crops is expected to increase in 2024, which could drive prices down. But the supply of animal products such as milk and eggs is expected to decline this year.
"BUT: Why are eggs so expensive?
How are food prices monitored?
Food prices are tracked by several federal agencies, including the Bureau of Labor Statistics and the Bureau of Economic Analysis.
Bureau of Labor Statistics sporer CPI, which measures the change in the average price consumers pay for goods and services, including food. SoCPIis also a measure of inflation.
In the CPI, the cost of food is of great relative importance to the overall index compared to the other goods and services tracked. Food costs are 13.4% of the index to be precise. Its importance is second only to shelter (34.73%). But food prices, like energy prices, tend to be more volatile and are therefore usually left out of the 'core inflation' version of the index.
The Bureau of Economic Analysis measures the price index for personal consumption expenditures.OfPCEtracks how much consumers spend on goods and services, and how consumers change their spending habits in response to price changes. Food is considered a non-durable good in his analysis. Core PCE - theFederal Reserve's favorite inflation measure – also excludes food and energy.
The USDA measures the costs of different food plans.These plansadjusted monthly, based on CPI data and average household income: frugal or low, moderate and liberal. The Thrifty Food Plan is the foundation of the Supplemental Nutrition Assistance Program, or SNAP.
