ERS revises vegetable forecast

The USDA’s Economic Research Service (ERS) is reporting that fresh vegetable prices have undergone a period of heavy inflation over the last few months, the second such stretch in 2013. ERS revised its forecast for fresh vegetables upward to 4 to 5 percent in 2013, as prices continue to remain high compared to the lows of 2012. The fresh vegetable CPI was 0.5 percent from September to October and is up 6.5 percent since October of 2012.

 

Based on current conditions, ERS's 2013 inflation forecast predicts increases of 1.5 to 2.5percent for all food prices, with food-at-home prices predicted to increase 1.0 to 2.0 percent. This means that prices are likely to increase less than they did in 2012 and that annual inflation should be lower than the 20-year historical average of 2.8 percent. The impact of the 2012 drought on retail food prices has been less than initially forecast. The inflationary pressure of the drought has been offset by factors such as decreased exports of many U.S. agricultural products, a stronger U.S. dollar, low energy price inflation, and decreased prices for many commodities unaffected by the drought.

 

Looking ahead to 2014, ERS forecasts that food price inflation will return to a range closer to the historical norm. Inflationary pressures are expected to be moderate. The food, food-at-home, and food-away-from-home CPIs are expected to increase 2.5 to 3.5 percent over 2013 levels. This forecast is based on an assumption of normal weather conditions; however, a resurgence of the drought in key agricultural areas or other severe weather events could potentially drive up food prices beyond the current forecasts.

 

See Changes in Food Price Indexes, 2011 through 2014