This article provides an in-depth analysis of the 2025 Food Price Outlook forecasts, incorporating the latest Consumer Price Index (CPI) and Producer Price Index (PPI) data from December 2024.
For a comprehensive view of Consumer Price Index and Producer Price Index datasets, including recent price fluctuations and anticipated changes across all food categories, please refer to our Overview page.
Consumer Price Index: Understanding Food Inflation at the Checkout
The Consumer Price Index (CPI), a key indicator of overall economic inflation, remained stable from November to December 2024, registering a 2.9 percent increase compared to December 2023. The CPI for all food experienced a slight uptick of 0.2 percent between November and December 2024, with food prices standing 2.5 percent higher than in December of the previous year.
Delving deeper, the rate of Food Inflation varies significantly depending on where you consume your meals:
- Food-at-home (Grocery): The CPI for food purchased at grocery stores or supermarkets saw a marginal increase of 0.1 percent from November to December 2024. However, when compared to December 2023, these prices were 1.8 percent higher, indicating a slower but persistent trend of food inflation in grocery aisles.
- Food-away-from-home (Restaurants): Dining out became slightly more expensive, with the food-away-from-home CPI rising by 0.3 percent in December 2024. Restaurant prices were 3.6 percent higher than in December 2023, demonstrating a more pronounced impact of food inflation on dining experiences.
Looking ahead to 2025, projections suggest that overall food prices will continue to climb at a rate comparable to 2024, but thankfully, at a more moderate pace than the historical average. The forecast for all food prices in 2025 points to a 2.2 percent increase, with a prediction range spanning from a potential decrease of 0.4 percent to a substantial rise of 4.9 percent.
For your grocery bills, food-at-home prices are expected to rise by 1.3 percent in 2025, with a prediction interval ranging from a decrease of 2.7 percent to an increase of 5.5 percent. Eating out will likely see a steeper increase, with food-away-from-home prices predicted to rise by 3.6 percent, within a prediction range of 2.0 to 5.1 percent.
The Food Price Outlook employs statistical models based on recent data trends to forecast these annual percentage changes in food prices. These forecasts compare average prices across all months of the current year against the previous year. The prediction intervals provided become more precise as more data becomes available throughout the year, reducing uncertainty. Discussions on price changes primarily focus on the midpoint of these prediction intervals, offering a balanced view, while the lower and upper bounds represent a 95-percent prediction interval, reflecting the inherent uncertainties in economic forecasting. For a detailed explanation of the forecasting methods, refer to the article “ERS Refines Forecasting Methods in the Food Price Outlook.
A Look Back: Food Inflation Trends Over the Years
Historically, food-at-home and food-away-from-home prices experienced similar growth rates from the 1970s to the early 2000s. However, a divergence emerged between 2009 and 2019. During this period, food-at-home prices even experienced deflation in 2016 and 2017, while food-away-from-home prices consistently increased. This difference can be attributed to varying cost structures associated with preparing food in restaurants versus retailing groceries.
The year 2020 witnessed a convergence, with food-at-home prices rising by 3.5 percent and food-away-from-home prices increasing by 3.4 percent. This was largely triggered by the COVID-19 pandemic, which caused a surge in grocery prices, especially for meat and poultry, while restaurant price inflation remained consistent with 2019 levels. In 2021, all-food prices accelerated, climbing by 3.9 percent.
2022 marked a significant spike in food prices, increasing by 9.9 percent – the fastest rate since 1979. Food-at-home prices surged by 11.4 percent, and food-away-from-home prices increased by 7.7 percent. This dramatic rise was fueled by factors such as the highly pathogenic avian influenza (HPAI) outbreak, impacting egg and poultry prices, and the war in Ukraine, which exacerbated existing inflationary pressures, including high energy costs.
In 2023, food inflation began to ease, with prices increasing by 5.8 percent. This moderation was due to the gradual easing of economy-wide inflationary factors, supply chain disruptions, and wholesale food prices from the peaks of 2022. The trend of slowing food price growth continued into 2024, with a 2.3 percent increase. This further deceleration was driven by cooling labor markets, reduced energy costs, and shifts in consumer demand, resulting in food-at-home prices increasing by a modest 1.2 percent (below historical averages) and food-away-from-home prices rising by 4.1 percent (slightly above historical averages).
Current CPI Changes: What’s Driving Grocery Food Inflation?
In December 2024, food-at-home prices experienced a slight overall increase of 0.1 percent compared to November 2024. Analyzing specific categories, prices rose for 10 food-at-home categories while decreasing for 5. Year-over-year, comparing December 2024 to December 2023, prices were actually lower in four food-at-home categories: fish and seafood, fresh fruits, processed fruits and vegetables, and other meats.
Looking to 2025, forecasts suggest that price changes for most food categories will be below their 20-year historical averages. Prices are expected to increase for 10 food-at-home categories and decrease for 5. While some input costs, such as energy, have declined, prices for unprocessed agricultural commodities have risen. Monitoring these factors will be crucial in assessing their continued impact on food prices.
Beef and Veal: After a 1.7 percent increase in November 2024, beef and veal prices decreased by 0.2 percent in December 2024. However, they remained 4.9 percent higher than in December 2023. While price increases are expected to moderate compared to 2024, beef and veal prices are still predicted to rise in 2025 due to persistent higher input costs and limited supply. The forecast for beef and veal prices in 2025 is a 1.5 percent increase, with a prediction interval of -6.8 to 11.1 percent.
Pork: Driven by seasonal trends, pork prices fell by 1.3 percent in December 2024 but were still 1.8 percent higher than in December 2023. Pork prices are predicted to decrease slightly by 0.8 percent in 2025, with a prediction interval of -8.5 to 7.5 percent.
Eggs: Retail egg prices continued their volatile swings, jumping by 8.4 percent in December 2024. The ongoing HPAI outbreak, with recent detections in January 2025, continues to impact egg prices by reducing the laying hen population. Despite being 36.8 percent higher in December 2024 than the previous year, egg prices remain below their peak in January 2023. Egg prices are forecast to increase significantly by 20.3 percent in 2025, with a wide prediction interval of 0.1 to 45.3 percent, reflecting the ongoing uncertainty in this market.
Dairy Products: Dairy prices increased by 0.2 percent in December 2024 and were 1.3 percent higher than in December 2023. Rising farm and wholesale prices, partly due to reduced milk production, pushed dairy prices upwards in the latter half of 2024. After a slight decrease in 2024, dairy prices are expected to rise in 2025. Dairy product prices are predicted to increase by 1.3 percent in 2025, with a prediction interval of -3.4 to 6.2 percent.
Fresh Fruits: Seasonal factors contributed to a 2.1 percent decrease in fresh fruit prices in December 2024. Driven by lower prices for bananas and citrus fruits, fresh fruit prices were 0.2 percent lower than in December 2023 and are expected to grow at a slower pace than their historical average in 2025. Fresh fruit prices are predicted to increase by a modest 0.7 percent in 2025, with a prediction interval of -4.4 to 6.3 percent.
Fats and Oils & Nonalcoholic Beverages: Prices for fats and oils declined by 0.7 percent, and nonalcoholic beverages decreased by 0.4 percent in December 2024. Prices for fats and oils are predicted to decrease by 1.6 percent in 2025, with a prediction interval of -7.7 to 5.0 percent. Nonalcoholic beverage prices are forecast to increase by 1.5 percent in 2025, growing at a slower rate than their historical average, with a prediction interval of -2.3 to 5.5 percent.
Producer Price Index: Gauging Food Inflation Pressures in the Supply Chain
The Producer Price Index (PPI) offers a complementary perspective to the CPI. While CPI measures retail price changes, the PPI tracks average prices received by domestic producers for their output. PPIs are reported across nearly every industry in the goods-producing sector, providing insights into price movements at earlier stages of the supply chain. For food markets, three key PPI commodity groups are particularly relevant:
- Unprocessed foodstuffs and feedstuffs
- Processed foods and feeds
- Finished consumer foods
Analyzing farm-level and wholesale-level prices within these categories provides a valuable understanding of price dynamics across the U.S. food supply chain, from farm to consumer.
PPIs are generally more volatile than CPIs due to their position earlier in the supply chain. Price volatility tends to decrease as products move through processing stages from farm to wholesale and finally to retail. This multi-stage processing in the U.S. food system means that CPI movements typically lag behind PPI changes. Therefore, the PPI serves as a useful leading indicator of potential future CPI trends and consumer food inflation.
While USDA, ERS does not provide specific forecasts for industry-level PPIs, historical data reveals a strong correlation between these prices and both the all-food and food-at-home CPIs.
PPI Forecast Changes: Wholesale Food Inflation Outlook for 2025
In 2025, PPI forecasts indicate price increases for eight categories, decreases for four, and no change for one. The inherent volatility at the farm and wholesale levels results in wider prediction intervals for PPI compared to retail-level CPI products.
Wholesale Poultry: After a 4.3 percent increase in November, wholesale poultry prices decreased by 4.0 percent in December 2024. However, they remained 4.4 percent higher than in December 2023. Wholesale poultry prices are predicted to decrease by 1.4 percent in 2025, with a prediction interval of -14.1 to 13.8 percent.
Farm-Level Eggs: Farm-level egg prices rose by 3.4 percent in December 2024, following a dramatic 54.3 percent spike in November. The ongoing HPAI outbreak continues to cause significant monthly fluctuations in farm-level egg prices. In December 2024, these prices were a staggering 134.5 percent higher than in December 2023, when prices were lower due to a temporary lull in the outbreak. Farm-level egg prices are predicted to increase sharply by 45.2 percent in 2025, with a very wide prediction interval of -30.9 to 228.8 percent, highlighting the extreme volatility of this category.
Farm-Level Milk: Farm-level milk prices fell by 4.9 percent in December 2024. Despite this monthly decrease, prices had generally risen throughout 2024, ending 11.7 percent higher than in December 2023, partly due to reductions in dairy cattle herds. Farm-level milk prices are predicted to increase by 1.3 percent in 2025, with a prediction interval of -22.1 to 32.4 percent.
Farm-Level Fruits & Vegetables: Farm-level fruit prices increased by 5.0 percent in December and were 17.3 percent higher than in December 2023. Despite a 14.7 percent decrease in December 2024, farm-level vegetable prices were still 21.3 percent higher than the previous year. While input costs and increased production led to slight price decreases in 2024, extreme weather events in some growing regions during the latter half of 2024 are expected to push prices upwards in 2025. Farm-level fruit prices are predicted to increase by 8.6 percent in 2025, with a prediction interval of -4.3 to 23.8 percent. Farm-level vegetable prices are predicted to increase by 1.4 percent in 2025, with a prediction interval of -20.8 to 31.8 percent.
For official USDA farm-level price forecasts, please consult the World Agricultural Supply and Demand Estimates at a Glance report. For more detailed analysis and explanations of farm-level prices, refer to USDA Economic Research Service Outlook publications, including: Livestock, Dairy, and Poultry, Oil Crops, Wheat, Fruit and Tree Nuts, and Vegetables and Pulses reports.
For access to Consumer Price Index and Producer Price Index datasets, encompassing recent price changes and forecasts for all categories discussed, please visit the Overview page.
