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US Food Prices Expected to Moderate in 2024, But Uncertainty Remains

Food prices in the United States are expected to continue decelerating in 2024, with inflation slowing compared to recent years, according to a report from the USDA. However, the report also highlights significant uncertainty around these forecasts, particularly for volatile categories like eggs and pork.

The report predicts that prices for all food will increase by 2.2% in 2024, with a prediction interval of 1.2% to 3.2%. This forecast reflects a moderation from the 5.8% increase seen in 2023.

"Food prices are expected to continue to decelerate in 2024 compared to recent years," the report states. "In 2024, prices for all food are predicted to increase 2.2 percent, with a prediction interval of 1.2 to 3.2 percent."

The report further breaks down the forecasts into food-at-home and food-away-from-home categories. Food-at-home prices, reflecting grocery store purchases, are predicted to increase by 1.0%, with a prediction interval of -0.4% to 2.5%, while food-away-from-home prices, representing restaurant meals, are predicted to increase by 4.2%, with a prediction interval of 3.6% to 4.8%.

Egg and Pork Prices: Volatility and Uncertainty

The report highlights significant volatility in egg and pork prices, reflecting the impact of the ongoing Highly Pathogenic Avian Influenza (HPAI) outbreak and other market factors. Retail egg prices decreased in May 2024, but prices are still higher than a year ago due to the ongoing HPAI impact.

"After egg prices peaked in January 2023, they declined or stabilized through much of 2023. However, new confirmations of HPAI in egg layers beginning in November 2023 drove price increases in late 2023 and early 2024," the report explains.

Pork prices have also increased, driven by higher wholesale prices.

"Pork prices increased by 1.4 percent in May 2024 and have increased for three straight months following higher wholesale pork prices in early 2024," the report notes.

The report forecasts egg prices to increase slightly in 2024, with a wide prediction interval reflecting the volatility in retail egg prices. Pork prices are also predicted to increase in 2024, with a prediction interval that reflects the uncertainty in the market.

Dairy and Fresh Vegetables: Slower Price Growth

In contrast to eggs and pork, prices for dairy products and fresh vegetables are expected to experience slower price growth in 2024.

Dairy prices are predicted to decrease slightly due to a continued decline since their peak in February 2023. Fresh vegetable prices are predicted to see moderate growth, likely influenced by lower input prices.

"Prices for dairy products declined by 0.3 percent in May 2024 and were 1.0 percent lower than May 2023," the report notes. "Fresh vegetable prices were 0.8 percent higher than May 2023."

The report's predictions of a moderation in food price inflation in 2024 align with the broader trend of easing inflation across the US economy, as measured by the Consumer Price Index (CPI). However, the report also underscores the potential for volatility and uncertainty, particularly in the categories of eggs and pork, where production disruptions and market dynamics can have a significant impact on prices.