Presentation is loading. Please wait.

Presentation is loading. Please wait.

O UTLOOK FOR U.S. R ETAIL F OOD P RICES AND I NFLATION, 2012 Richard Volpe, Ph.D. Food Markets Branch Food Economics Division ERS-USDA USDA Agricultural.

Published byCarmella Webster Modified over 9 years ago

Similar presentations

Presentation on theme: "O UTLOOK FOR U.S. R ETAIL F OOD P RICES AND I NFLATION, 2012 Richard Volpe, Ph.D. Food Markets Branch Food Economics Division ERS-USDA USDA Agricultural."— Presentation transcript:

1 O UTLOOK FOR U.S. R ETAIL F OOD P RICES AND I NFLATION, 2012 Richard Volpe, Ph.D. Food Markets Branch Food Economics Division ERS-USDA USDA Agricultural Outlook Forum February 23, 2012 1

2 H EAVY F OOD P RICE I NFLATION IN 2011 2 All food: 3.7% Food-at-home: 4.8% Source: BLS CPI Data, 2011

3 3 P ERSPECTIVE : L ONG T ERM F OOD - AT -H OME P RICE I NFLATION Source: BLS CPI Data, 1970-2011

4 CPI AND CPI FOR F OOD, 1970-2011 Source: BLS CPI Data, 1970-2011 4

5 FAH AND FAFH, 1970-2011 5 Source: BLS CPI Data, 1970-2011

6 F OOD, E NERGY, M EDICAL C ARE, S ERVICES 1990-2011 Source: BLS CPI Data, 1970-2011 6

7 S OURCES OF R ETAIL P RICE C HANGES Changes in Consumer Demand Changes in Retail Market Competition Number of retailers in a market Type of retailers Specialization Changes in Costs Cost of Goods Sold (Farm and Wholesale) Regional Variation Operating Costs (e.g. Energy) 7

8 C ONSUMERS ’ FAH E XPENDITURE P ATTERNS, 1999-2009 8 Source: Nielsen Homescan Data, 1999-2009

9 C ONSUMERS I NCREASINGLY S HOP AT N ONTRADITIONAL F ORMATS FOR FAH 9 Source: Nielsen Homescan Data, 1999-2009

10 S POTLIGHT : N ONTRADITIONALS 10 Source: Nielsen Homescan Data, 1999-2009

11 PPI FOR R ETAIL G ROCERY D EPARTMENT M ARGINS, R EVENUES M INUS W HOLESALE C OST Source: BLS PPI Data, 2001-2011 11

12 T HE U PDATED F OOD D OLLAR Source: A Revised and Expanded Food Dollar Series (2011), ERR114, Economic Research Service, www.ers.usda.gov/data/FoodDollar/ Farm Share: Farmers’ receipts from sale of raw food commodities 12

13 W HERE A C ONSUMER D OLLAR S PENT ON F OOD G OES Source: A Revised and Expanded Food Dollar Series (2011), ERR114, Economic Research Service, www.ers.usda.gov/data/FoodDollar/ 13

14 ERS F OOD M ARKETS AND P RICES R ESEARCH Leibtag & Kumcu (May 2011) examined importance of regional variation in prices Key finding: fruit and vegetable prices vary substantially across markets 30-70% more expensive in highest-priced markets as compared to lowest-priced markets Implications for purchasing power of programs to improve food security, e.g. WIC 14

15 ERS F OOD M ARKETS AND P RICES R ESEARCH Stewart & Blayney (Aug. 2011) study dairy price transmission Key finding: Milk price fluctuations drive dairy retail price changes, but incompletely and asymmetrically Farm price increases passed on more quickly and completely than decreases But no evidence of a widening of the farm- retail spread from 2000-2010 Due in part to retail competitive pressure 15

16 ERS F OOD M ARKETS AND P RICES R ESEARCH Volpe (December 2011) examined prices by branding Key finding: Competition within stores, between NBs and PLs, drives prices and sales Lowers prices and increases product variety NB/PL price difference is falling NB/PL competition is fiercest when market competition is weak 16

17 ERS F OOD M ARKETS AND P RICES R ESEARCH Okrent & Alston (2011) examined FAFH demand Key finding: FAFH demand much more responsive to income-driven changes in consumption Demands for healthful foods less price responsive than unhealthful foods Strong substitutions and complements in demand among FAFH groups, important for any policy consideration 17

18 ERS F OOD M ARKETS AND P RICES R ESEARCH Carlson and Frazao (forthcoming, 2011) compares prices across categories Key finding: How you measure the price of food matters Some other studies have shown that less healthful foods are cheaper, as measured on a caloric basis As measured by edible weight or portion size, the opposite is true: fruits, vegetables, grains, dairy are less expensive than foods high in saturated fats, added sugars, etc. 18

19 2011-2012 F OOD I NFLATION I S U NLIKELY TO A PPROACH 2007-2008 L EVELS 19

20 F OOD I NFLATION 2009-2012 2009 Food commodity costs down from summer 2008 highs Energy prices down Recession leads to weakened domestic and global demand 2010 Sputtering global economy, deflation concerns Renewed commodity price pressures 2011 Higher commodity costs (corn, wheat, soybeans, etc.) Higher energy and transportation costs Increased U.S. exports due to growing global demand, weak U.S. Dollar Large animal supplies at historic lows due to lingering effects of 2008 Retailers slow to pass on cost increases for most of year 20

21 F OOD I NFLATION 2009-2012 2012 Most inflationary pressures remain but do not intensify Retailers begin to pass on costs in earnest US economy improves, dollar strengthens Domestic demand grows little Exports fall Late-2011 surge in prices means higher starting point for year 21

22 P ERCENT C HANGE IN F OOD CPI ( A ) Items2008200920102011Forecast 2012 All Food5.51.80.8 3.7 2.5 to 3.5 FAFH4.43.51.32.32 to 3 FAH6.40.50.34.82.5 to 3.5 Beef4.52.910.24 to 5 Pork2.3-2.04.78.53 to 4 Other Meats 3.12.3-0.16.42.5 to 3.5 Poultry5.01.7-0.12.93 to 4 22

23 P ERCENT C HANGE IN F OOD CPI ( B ) Items2008200920102011Forecast 2012 All Food5.51.80.8 3.7 2.5 to 3.5 FAH6.40.50.34.82.5 to 3.5 Fish6.03.61.17.14 to 5 Dairy8.0-6.41.16.82 to 3 Fats and Oils 13.82.3-0.39.33.5 to 4.5 Sugar +Sweets 5.55.62.23.32 to 3 Eggs14.0-14.71.59.21 to 2 23

24 P ERCENT C HANGE IN F OOD CPI ( C ) Items2008200920102011Forecast 2012 All Food5.51.80.8 3.7 2.5 to 3.5 FAH6.40.50.34.82.5 to 3.5 Fresh Fruits4.8-6.1-0.63.33 to 4 Fresh Vegetables 5.6-3.42.05.61 to 2 Processed F + V 9.56.6-1.32.93 to 4 Cereals + Bakery 10.23.2-0.83.93.5 to 4.5 Nonalc. Bev. 4.31.9-0.93.21.5 to 2.5 24

25 C AVEATS Food commodity volatility Food ~ Energy Connection Global demand for U.S. exports Retail margin pressure Post-recession consumer response Weather is major source of uncertainty Longer term structural inflation concerns 25

26 R ESOURCES FOR F OOD P RICE T RENDS R ESEARCH  ERS CPI Forecasts http://www.ers.usda.gov/Briefing/CPIFoodAndExpenditures/Data/cpiforecasts.htm New ERS Reports http://www.ers.usda.gov/publications/err129/ http://www.ers.usda.gov/Publications/EIB75/ http://www.ers.usda.gov/Publications/ERR105/ BLS CPI, PPI, and Average Price Data http://data.bls.gov/PDQ/outside.jsp?survey=cu http://data.bls.gov/PDQ/outside.jsp?survey=wp http://data.bls.gov/PDQ/outside.jsp?survey=ap AMS Fruit and Vegetable Report http://www.ams.usda.gov/mnreports/fvwretail.pdf IMF World Commodity Prices http://www.imf.org/external/np/res/commod/index.asp  ERS CPI Forecasts http://www.ers.usda.gov/Briefing/CPIFoodAndExpenditures/Data/cpiforecasts.htm New ERS Reports http://www.ers.usda.gov/publications/err129/ http://www.ers.usda.gov/Publications/EIB75/ http://www.ers.usda.gov/Publications/ERR105/ BLS CPI, PPI, and Average Price Data http://data.bls.gov/PDQ/outside.jsp?survey=cu http://data.bls.gov/PDQ/outside.jsp?survey=wp http://data.bls.gov/PDQ/outside.jsp?survey=ap AMS Fruit and Vegetable Report http://www.ams.usda.gov/mnreports/fvwretail.pdf IMF World Commodity Prices http://www.imf.org/external/np/res/commod/index.asp 26

27 C ONTACT I NFORMATION Richard Volpe, PhD rvolpe@ers.usda.gov 202-694-5395 For more information, see http://www.ers.usda.gov/Briefing/CPIFoodAndExpenditures/ http://www.ers.usda.gov/Briefing/CPIFoodAndExpenditures/ 27

Download ppt "O UTLOOK FOR U.S. R ETAIL F OOD P RICES AND I NFLATION, 2012 Richard Volpe, Ph.D. Food Markets Branch Food Economics Division ERS-USDA USDA Agricultural."

Similar presentations

North American Free Trade Agreement

North American Free Trade Agreement
1 Supply, Demand and Prices for Agricultural Commodities Presented to International Food Aid Conference April 15, 2008 Patrick Packnett Office of Global.

1 Supply, Demand and Prices for Agricultural Commodities Presented to International Food Aid Conference April 15, 2008 Patrick Packnett Office of Global.
Fig 4.2 – ABARES farm performance (avg per farm) Agribusiness Breakfast Unilever Sustainable Sourcing Meeting 27 August 2012.

Fig 4.2 – ABARES farm performance (avg per farm) Agribusiness Breakfast Unilever Sustainable Sourcing Meeting 27 August 2012.
Directorate for Food, Agriculture and Fisheries ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT ORGANISATION DE COOPÉRATION ET DE DEVELOPMENT ÉCONOMIQUES.

Directorate for Food, Agriculture and Fisheries ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT ORGANISATION DE COOPÉRATION ET DE DEVELOPMENT ÉCONOMIQUES.
FY 2014 U.S. Agricultural Trade Forecasts Changes to FY 2014 Forecasts Exports $6.9 billion to $149.5 billion Imports $0.5 billion to $110.5 billion Surplus.

FY 2014 U.S. Agricultural Trade Forecasts Changes to FY 2014 Forecasts Exports $6.9 billion to $149.5 billion Imports $0.5 billion to $110.5 billion Surplus.
Red Meat and Poultry Outlook Curt Lacy Extension Economist-Livestock.

Red Meat and Poultry Outlook Curt Lacy Extension Economist-Livestock.
A Producer Perspective of the Hog Sector USDA Agricultural Outlook Forum February 24, 2012 Jon Caspers.

A Producer Perspective of the Hog Sector USDA Agricultural Outlook Forum February 24, 2012 Jon Caspers.
Outlook for the U.S. Livestock and Poultry Sectors in 2011 Presented By Shayle D. Shagam World Agricultural Outlook Board, USDA USDA Outlook Forum Washington,

Outlook for the U.S. Livestock and Poultry Sectors in 2011 Presented By Shayle D. Shagam World Agricultural Outlook Board, USDA USDA Outlook Forum Washington,
IFIF/FAO Business Meeting - Rome 2006 Agriculture and the Animal Feed Industry.

IFIF/FAO Business Meeting - Rome 2006 Agriculture and the Animal Feed Industry.
FAPRI Outlook Prospects for the Next Decade: The New Ag/Energy Nexus

FAPRI Outlook Prospects for the Next Decade: The New Ag/Energy Nexus
Department of Agricultural Economics Purdue University Food Price Outlook Corinne Alexander Purdue University August 19,

Department of Agricultural Economics Purdue University Food Price Outlook Corinne Alexander Purdue University August 19,
Developed by: Bonnie Braun, Ph.D. Extension Family Policy Specialist University of Maryland Cooperative Extension Presented by: [insert name] [insert name]

Developed by: Bonnie Braun, Ph.D. Extension Family Policy Specialist University of Maryland Cooperative Extension Presented by: [insert name] [insert name]
Department of Economics Food and Fuel Wallace Centers of Iowa Dialogue Dinner Des Moines, Iowa July 16, 2009 Chad Hart Assistant Professor/Grain Markets.

Department of Economics Food and Fuel Wallace Centers of Iowa Dialogue Dinner Des Moines, Iowa July 16, 2009 Chad Hart Assistant Professor/Grain Markets.
Ⓒ Olof S. Tackling the challenges in commodity markets and on raw materials Pierluigi Londero DG for Agriculture and Rural Development European Commission.

Ⓒ Olof S. Tackling the challenges in commodity markets and on raw materials Pierluigi Londero DG for Agriculture and Rural Development European Commission.
1 Food commodity prices: History & prospects Ron Trostle Economic Research Service U.S. Department of Agriculture ? USDA Outlook Forum February 20, 2014.

1 Food commodity prices: History & prospects Ron Trostle Economic Research Service U.S. Department of Agriculture ? USDA Outlook Forum February 20, 2014.
Commodity Marketing Activity Chapter #2. Supply and Demand n Supply: quantity of a commodity the producers are willing to provide at a given price n If.

Commodity Marketing Activity Chapter #2. Supply and Demand n Supply: quantity of a commodity the producers are willing to provide at a given price n If.
Commodity Market Outlook WBFI Annual Meeting T. Randall Fortenbery Professor School of Economic Sciences Washington State University.

Commodity Market Outlook WBFI Annual Meeting T. Randall Fortenbery Professor School of Economic Sciences Washington State University.
Overview of the Global Oilseed Markets Annual Meeting National Cottonseed Products Association Santa Fe, New Mexico May 4, 2009 John Baize.

Overview of the Global Oilseed Markets Annual Meeting National Cottonseed Products Association Santa Fe, New Mexico May 4, 2009 John Baize.
Education Phase 3 Food price and food choice. Global food prices Since 2005, food prices have risen globally. Year average 200520062007200820092010201120122013*

Education Phase 3 Food price and food choice. Global food prices Since 2005, food prices have risen globally. Year average *
FY 2015 U.S. Agricultural Trade Forecasts Changes to FY 2015 Forecasts Exports $2.0 billion to $141.5 billion Imports $3.0 billion to $119.0 billion Surplus.

FY 2015 U.S. Agricultural Trade Forecasts Changes to FY 2015 Forecasts Exports $2.0 billion to $141.5 billion Imports $3.0 billion to $119.0 billion Surplus.

Similar presentations

Ads by Google