WASHINGTON — Retail food prices declined by 1.3% in 2016, the first calendar year decline in almost half a century. According to the U.S. Department of Agriculture, expanding animal herd/poultry flock numbers were important contributors to the food price weakness.
Over the last 50 years, the Consumer Price Index for food at home has risen an average of 4% per year. The gains were as large as 16.4% and 14.9% in 1973 and 1974, respectively, a surge precipitated by agricultural commodity and energy price shocks, the U.S.D.A. said in the most recent issue of Amber Waves.
“On the opposite end of the spectrum, prices increased at levels well below the historical average in 2009 (0.5%) and 2010 (0.3%), as the 2007-09 recession put downward pressure on prices for many goods, including food,” the U.S.D.A. said.
The last time retail food prices fell was in 1967, a 0.3% decline from the year before.
Food categories for which prices declined last year included beef and veal, pork, poultry, eggs and dairy.
A combination of factors led to the decline in 2016, the U.S.D.A. said.
“Retail food prices, in general, are driven by the costs of several production factors, including commodity inputs, transportation and food processing,” the U.S.D.A. said. “Declining prices for retail meats, eggs and dairy in 2016 are largely a story about rising commodity production, especially for eggs. Retail egg prices declined by 21.1% in 2016, as the industry recovered from the outbreak of Highly Pathogenic Avian Influenza (H.P.A.I.) that killed 11% of egg-laying birds in 2015. As the number of egg-laying birds and production returned to pre-H.P.A.I. levels, prices began to drop both at the farm and retail levels. The cattle, hog, poultry and dairy industries also saw upticks in the number of animals produced in 2016.”
Strength in the value of the U.S. dollar against other currencies and weak energy prices also factored in the pressure on U.S. food prices in the first half of 2016.Certain food categories saw price increases, including fruits, up 2.2%, and “other food products”, up 0.3%. Vegetable prices were unchanged during the year.