The all-items Consumer Price Index (CPI), a measure of economy-wide inflation, rose 0.1 percent from September to October 2016 and is 1.6 percent above the Oct. 2015 level according to a press release. While the CPI for all food also rose 0.1 percent from September to October, food prices are 0.4 percent lower compared with the Oct. 2015 level. The degree of food price inflation varies depending on whether the food was purchased for consumption away from home or at home.
Looking ahead to 2017, supermarket prices are expected to rise between 0.5 and 1.5 percent. Despite the expectation for declining prices in 2016, poultry, fish and seafood, and dairy prices are expected to rise in 2017. These forecasts are based on an assumption of normal weather conditions throughout the remainder of the year; however, severe weather or other unforeseen events could potentially drive up food prices beyond the current forecasts. In particular, the drought in California could have large and lasting effects on fruit, vegetable, dairy, and egg prices. Also, a stronger U.S. dollar could continue to make the sale of domestic food products overseas more difficult. This would increase the supply of foods on the domestic market, placing downward pressure on retail food prices.
Prices for fresh fruits rose 1.4 percent from September to October and are 0.6 percent higher than in October 2015. ERS expects fresh fruit prices to increase 2 to 3 percent in 2016 and 1 to 2 percent in 2017. Fresh vegetable prices also rose in October, increasing 0.5 percent over September levels; prices are 2.7 percent lower than October 2015. While prices for potatoes and lettuce decreased month to month, tomato prices rose 5.4 percent and other fresh vegetable prices increased 0.3 percent over the same time period. Factors, such as a stronger U.S. dollar and low oil prices, have mitigated the effect of the drought. ERS expects fresh vegetable prices to increase between 0.5 and 1.5 percent in 2016, but to decrease between 3 and 2 percent in 2017.
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