ARLINGTON, Va. – Food prices are expected to increase 7.9 percent this year, according to the USDA’s Economic Research Service (ERS). In 2022, prices rose 9.9 percent, the highest annual rate since 1979, the agency said.

Prices for food purchased for consumption at home are predicted to go up 8.6 percent, ERS said, down from last year’s 11.4 percent. The agency said prices for food purchased for consumption away from home will increase 8.3 percent.

Andrew Harig, vice president for tax, trade, sustainability & policy development for FMI – the Food Industry Association, said recent polling shows consumers are worried about rising prices and if they have enough money to purchase the food they need.

“Food prices are really hitting them and are center of mind in the way they haven’t been in the past,” he explained. “No one who’s under the age of 40 has seen an inflationary environment like this. It does feel really different. It does feel kind of traumatic when you are going and you are paying a noticeable amount week after week.”

Harig and ERS staff spoke Feb. 23 during USDA’s 99th annual Agricultural Outlook Forum in Arlington.

Americans continue to face higher prices for nearly all consumer goods, Harig said, including food at the grocery store and in restaurants. Factors contributing to the higher prices include disruptions to the global supply chain, unprecedented labor challenges, shifting consumer shopping and consumption habits, and Russia’s invasion of Ukraine, he said.

In inflation-adjusted dollars, the consumer food dollar goes further today than ever before, Harig noted.

“The challenge with this is, it’s a glass-is-half-full approach,” he said. “If you look up ‘inflation-adjusted dollars’ in a thesaurus, you’ll find ‘missing the point’ as a synonym. For the consumer, they don’t care about that. They care about their last trip to the store. They care that they are paying more this week than they did this same week last year.”

In February 2020, the average grocery store spend was $121 a week, Harig stated. After COVID hit and consumers started stockpiling, the weekly spend shot up to $161, he said. In February 2023, the weekly spend was $151, up from $148 in the last survey of 2022.

“At the store level, revenues are really strong overall because of that high level of spending,” he pointed out. “But what we have seen over the past year is volumes – the amount of food people are getting – are down. They’re spending a little bit more but they’re actually buying less than they did previously.”

Consumers said they are responding to higher food prices by looking for more deals and by buying more store brands, Harig said.

Spiro Stefanou, ERS administrator, said 2022 food prices “were driven by sustained increases across all food categories. Between this past December and January, food prices increased again about .7 percent. So still climbing but it’s decelerating. These rapid increases in grocery store prices reflect an increasing cost of inputs along the food supply chain.”

In 2021, the most recent data available, the average U.S. household spent 12 percent of its total expenditures on food, said Matthew MacLachlan, an ERS research economist. That figure was third behind housing and transportation.

Last year, prices for all food-at-home categories tracked by ERS grew by at least 5 percent, he noted. Eggs, at more than 30 percent, saw the biggest increase. Other categories include poultry, dairy, sugar and sweets, fresh fruits and vegetables, and beef and veal.

Vilsack delivers keynote address

In his keynote speech, Agriculture Secretary Tom Vilsack said U.S. farmers saw record farm income in 2021 and 2022.

While 2023 may not set a record, he said, farmers will have incomes better than the historical average. Over the last couple of years, farm income has beat the historical average by as much as 50 percent, Vilsack added.

Despite the records, nearly 50 percent of U.S. farmers, over the course of the last several years, have had negative farm incomes, according to the ERS, he said. Nearly another 40 percent made money, but the majority of what they made came from off-farm income.

“So while we had record income, those large, commercial-sized operations did very very well and they should, because they’ve invested a lot of time and energy in producing an extraordinary crop. But the other 90 percent or so struggled. So that’s why I think we’re at a pivotal moment. I think we have to ask ourselves a serious question about whether we want a system that continues to see further consolidation and the impact that has on farmers and on rural communities, or whether we’re innovative enough to figure out a new way, a different way, an expanded opportunity, so that when we have record income, it’s shared not by a few but by many and most.”

Vilsack mentioned several tools, such as the Commodity Credit Corporation, the American Rescue Plan and the Bipartisan Infrastructure Law, that are available to create additional profit opportunities for farmers.

Such opportunities include increasing market value by stressing to customers that the food products they’re purchasing were produced in a sustainable way, the secretary said. Farmers could also be paid for the environmental results they’re able to obtain from sustainable practices. An expansion of processing facilities could increase market opportunities for producers, he said.