Experts predict high food inflation in the U.S. will persist throughout 2023
According to the U.S. Department of Agriculture’s (USDA) 2023 Food Price Outlook, food prices increased 9.9 percent in 2022, with all food price categories tracking more than five percent above previous year levels.
Following a year’s worth of skyrocketing food prices, USDA doesn’t believe there will be any relief from high food inflation in the near future.
In fact, while the department expects food prices to grow more slowly over coming months than they did in the past year, they still predict above-historical-average rates and have forecast 2023 food prices to increase by 7.1 percent.
Consumer Price Index
The Consumer Price Index (CPI) for food, a measure of economy-wide inflation, was down 0.3 percent from November 2022 to December 2022, but was up 6.5 percent from December 2021.
“The level of food price inflation varies depending on whether the food was purchased for consumption at home or away from home,” writes USDA. “The food-at-home – grocery store or supermarket purchases – CPI increased 0.3 percent from November 2022 to December 2022 and was 11.8 percent higher than December 2021.”
Comparatively, the food-away-from-home – restaurant purchases – CPI increased 0.4 percent in December 2022 and was 8.3 percent higher than December 2021, according to USDA.
CPI price predictions
USDA explains the primary forecasting methodology used in their Food Price Outlook changed between December 2022 and January 2023.
“Data using legacy methods will continue to be published alongside the primary methods but will not be reported in the summary findings,” says USDA. “The updated primary methods are based entirely on statistical models fitted to recent trends in the data. These methods provide wider initial prediction intervals, which narrow over the forecast period as more data becomes available and the degree of uncertainty declines.”
With this said, USDA points out prices are expected to decrease for three price categories in 2023, including a 1.8 percent decrease in beef and veal prices, a three percent decrease in pork prices and a 1.7 percent decrease in fresh fruit prices.
The department also predicts an increase over the next year for eight food categories including other meats, up 12.8 percent; dairy products, up eight percent; fats and oils, up 16.5 percent; processed fruits and vegetables, up 9.6 percent; sugar and sweets, up 10.6 percent; cereals and bakery products, up 12 percent; nonalcoholic beverages, up 8.7 percent and other foods, up 6.8 percent.
Record-high egg prices
Additionally, USDA forecasts egg prices to continue increasing up to 27.3 percent throughout the next year. The department notes retail egg prices increased 11.1 percent in December 2022, 59.9 percent higher than prices from the year before.
While USDA notes it is normal for egg prices to jump during holiday seasons or times of economic strain, today’s record-high egg prices are the result of a highly pathogenic avian influenza (HPAI) outbreak, a booming demand for egg consumption, the high cost of production, including higher fuel, feed and fertilizer costs and inflation in general.
“The ongoing outbreak of HPAI continues to reduce the U.S. egg/layer flock, as well as the poultry flock, to a lesser extent,” says USDA. “This decrease is expected to increase wholesale and retail egg prices for coming months. The HPAI outbreak has contributed to elevated egg and poultry prices as over 57 million birds, 300 commercial flocks and 47 states have been affected.”
In states where HPAI decimated poultry flocks, the demand for laying hens and eggs for consumption and food preparation outpaced supplies. In fact, USDA reported egg inventories were 29 percent lower in the final week of December 2022 than the year previous.
“On constrained supplies, wholesale egg prices were elevated throughout the year. The HPAI recurrences in the fall further constrained egg inventories, which had not recovered from the spring wave,” writes USDA.
In a Jan. 27 Farm Progress article written by Gail Ellis, Oklahoma State University Extension Food Economics Specialist Rodney Holcomb notes, “The price of chicken also went up last year because of HPAI, but the rebound is faster for broilers. It only takes about six weeks to go from a hatched chick to a broiler ready for market.”
In contrast, Holcomb explains laying hens take months to grow to sexual maturity, start laying eggs and provide a consistent supply at peak production.
“After flocks had to be euthanized following the HPAI outbreak, all of those birds had to be replaced,” reiterates Stephanie Klein, program specialist in the Department of Poultry Science at Texas A&M University, in a Jan. 24 article published by KXAN News.
“Egg producers have been repopulating their coops, and many of the chicks will hatch in the next few weeks. After they emerge from their shells, it takes around 20 weeks until they can start laying eggs of their own and 40 weeks before they reach their peak production levels,” she adds.
With this said, Klein believes egg prices may begin returning to more normal levels after August of this year.
Hannah Bugas is the managing editor for the Wyoming Livestock Roundup. Send comments on this article to email@example.com.