USDA Expects Food Prices To Fall This Year; Wholesale Prices Fell Again In January

Wholesale food prices rose 5.5% last year—the fifth consecutive year of increases in the U.S.—but the U.S. Department of Agriculture is forecasting significant price drops for some key commodity categories in 2015. The forecasts were part of the USDA’s December 2014 projections.

The department forecasts pork prices should fall 11%-17% this year, after gaining 19% last year as the market suffered from a virus that killed millions of piglets. The virus has been tamed, and pork production is rising. Prices for dairy products, including milk, butter and cheddar cheese, are expected to fall in the 17%-25% range after 20% plus gains last year. The decline for eggs is projected in the 5%-13% range after a 15% rise last year. Prices for poultry products, including broiler chicken and turkey, are forecast in a range 5% lower to 3% higher. They were up 6% and 8% respectively in 2014. Only beef among the major proteins is forecast to continue rising, with projected gains in the 3%-11% range. Beef prices rose 23% last year and have been running at record levels for nearly two years.

Meanwhile, wholesale food prices fell for the third consecutive month in January, according to data from the U.S. Bureau of Labor Statistics Producer Price Index. Prices were down at all three levels the BLS tracks. Foods at the final demand stage were off 1.1%, foods and feeds at the intermediate demand stage were down 2.5% and intermediate demand foodstuffs and feedstuffs dropped 1.8%. Wholesale prices fell 0.6% in December and 0.8% in November, according to the National Restaurant Association, which averages the three levels.

The recent drop in wholesale prices impacted January food-at-home prices as tracked by the BLS Consumer Price Index. Prices fell 0.2% during the month, the first decline for food-at-home prices since May 2013. Menu prices continued to rise, up 0.2% for January.