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Food prices expected to continue to climb in 2022

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Of all the CPI food-at-home categories tracked by the USDA ERS, beef and veal has had the largest relative price increase (8.7%) in 2021.

According to the latest USDA Economic Research Service Food Price Outlook, 2021 food-at-home prices have increased 3.1% and food-away-from-home prices have increased 4.2% year-to-date from 2020.

The Consumer Price Index (CPI) for all food has increased an average of 3.6%. Of all the CPI food-at-home categories tracked by the USDA ERS, beef and veal has had the largest relative price increase (8.7%) and the fresh vegetables category the smallest (0.9%). No food categories have decreased in price in 2021 compared with 2020.

"We're looking at price increases between 4 and 5% for food in restaurants," says USDA Economist Matt MacLachlan.

When 2021 is finally over, MacLachlan expects the two years of accelerated food price increases to round out at 3.5% for grocery store foods in 2020 and another 3.5% in 2021. In 2019 prices rose less than 1%.

"We usually see deceleration following accelerations," says MacLachlan. "That's not to say that food prices are going to go down. It's just the rate at which they have increased should slow a bit."

"A slowing of the increase still means higher prices," says USDA Chief Economist Seth Meyer.

While 2021 food prices are garnering attention, it is not unprecedented. In the first part of 1979, former USDA Chief Economist Howard Hjort reported a 17.7% annual rate increase.

For 2022, the economists are expecting rising prices, but not as severe as the hike 42 years ago.

"For now, we are forecasting that prices for all food will increase between 2 and 3% and that food-away-from-home prices will increase 3 to 4%," MacLachlan says. "That's slightly above their historical average of about 2.8%, and that food-at-home will increase somewhere between 1.5 and 2.5%, centered on its historical average of 2%."

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