The all-items Consumer Price Index (CPI), a measure of economy-wide inflation, remained stable from November to December 2024, showing a 2.9 percent increase year-over-year. The CPI for all food experienced a 0.2 percent monthly increase and a 2.5 percent rise compared to December 2023. Food price inflation varies depending on where food is purchased. Food-at-home (grocery store) CPI rose 0.1 percent monthly and 1.8 percent annually, while food-away-from-home (restaurant) CPI increased 0.3 percent monthly and 3.6 percent annually.
In 2025, Food Prices are projected to increase at a similar rate to 2024, slower than the historical average. Overall food prices are predicted to rise by 2.2 percent (with a prediction interval of -0.4 to 4.9 percent). Food-at-home prices are expected to increase by 1.3 percent (-2.7 to 5.5 percent prediction interval). Food-away-from-home prices are forecast to rise by 3.6 percent (2.0 to 5.1 percent prediction interval). The Food Price Outlook forecasts these changes by averaging observed and predicted monthly prices for the current year compared to the previous year, using statistical models based on recent data trends. Prediction intervals narrow as more data becomes available, reducing uncertainty.
Historically, food-at-home and food-away-from-home prices increased at similar rates until a divergence occurred between 2009 and 2019. This was partly due to differences in the costs associated with restaurant food preparation versus retail grocery sales. The COVID-19 pandemic caused a convergence in 2020, with both categories experiencing roughly 3.5 percent increases, driven by rapid increases in at-home food prices, particularly for meat and poultry.
In 2022, food prices surged by 9.9 percent, the highest rate since 1979, influenced by factors like the avian influenza outbreak, the war in Ukraine, and high energy costs. Food-at-home prices saw an 11.4 percent increase, while food-away-from-home prices rose by 7.7 percent. 2023 experienced a moderation in food price increases (5.8 percent) due to easing inflationary pressures, supply chain improvements, and lower wholesale food prices. This trend continued in 2024 with a 2.3 percent increase, attributed to cooling labor and energy costs and shifts in consumer demand.
December 2024 saw a 0.1 percent increase in food-at-home prices compared to November 2024. Ten food-at-home categories experienced price increases, while five saw declines. Year-over-year, four categories—fish and seafood, fresh fruits, processed fruits and vegetables, and other meats—showed lower prices. 2025 projections indicate that most food categories will experience price changes below their 20-year historical averages.
Beef and veal prices, after a 1.7 percent increase in November, decreased by 0.2 percent in December 2024 but remained 4.9 percent higher than in December 2023. Despite expected moderation, beef and veal prices are projected to increase by 1.5 percent in 2025 (-6.8 to 11.1 percent prediction interval) due to higher input costs and tight supplies.
Pork prices experienced a seasonal decline of 1.3 percent in December 2024 but were still 1.8 percent higher than the previous year. A decrease of 0.8 percent is predicted for pork prices in 2025 (-8.5 to 7.5 percent prediction interval). Retail egg prices, highly volatile due to the ongoing Highly Pathogenic Avian Influenza (HPAI) outbreak, surged by 8.4 percent in December 2024, resulting in a 36.8 percent increase year-over-year. Despite being below the January 2023 peak, egg prices are projected to increase by a significant 20.3 percent in 2025 (0.1 to 45.3 percent prediction interval).
Dairy product prices increased by 0.2 percent in December 2024, showing a 1.3 percent year-over-year increase. Driven by higher farm and wholesale prices due to lower milk production, dairy prices are predicted to rise by 1.3 percent in 2025 (-3.4 to 6.2 percent prediction interval) after a slight decline in 2024. Fresh fruit prices decreased by 2.1 percent in December 2024 due to seasonal trends, ending 0.2 percent lower than the previous year. A modest 0.7 percent increase is projected for fresh fruit prices in 2025 (-4.4 to 6.3 percent prediction interval). Fats and oils, and nonalcoholic beverages also saw price decreases in December 2024. Fats and oils are predicted to decline by 1.6 percent in 2025 (-7.7 to 5.0 percent prediction interval), while nonalcoholic beverages are expected to increase by 1.5 percent (-2.3 to 5.5 percent prediction interval).
The Producer Price Index (PPI) measures average prices received by domestic producers for their output, offering insights into price movements across the food supply chain. While the USDA does not forecast PPIs, these indices, known for their volatility, can indicate future CPI trends. PPI categories for 2025 show mixed predictions, with eight categories expected to increase, four to decrease, and one to remain unchanged. Wholesale poultry prices decreased by 4.0 percent in December 2024, yet remained 4.4 percent higher year-over-year. A 1.4 percent decrease is projected for 2025 (-14.1 to 13.8 percent prediction interval). Farm-level egg prices, highly volatile due to HPAI, rose by 3.4 percent in December 2024, resulting in a staggering 134.5 percent year-over-year increase. A 45.2 percent increase is projected for 2025 (-30.9 to 228.8 percent prediction interval). Farm-level milk prices fell 4.9 percent in December 2024 but were still 11.7 percent higher than the previous year. A 1.3 percent increase is predicted for 2025 (-22.1 to 32.4 percent prediction interval).
Farm-level fruit and vegetable prices, despite December 2024 fluctuations, were significantly higher year-over-year (17.3 percent and 21.3 percent respectively). While 2024 saw slight declines due to lower input costs and increased production, 2025 projections indicate increases: 8.6 percent for fruit (-4.3 to 23.8 percent prediction interval) and 1.4 percent for vegetables (-20.8 to 31.8 percent prediction interval), potentially influenced by extreme weather conditions in late 2024.
