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overview
 The Consumer Price Index (CPI) for all food is forecast to increase at an annual rate of 3 to 4 percent in 2004 and 2005 as an improving economy and rising production costs have combined to cause a slight acceleration in retail food price inflation. The CPI for food increased 2.2 percent in 2003 and, before the recent acceleration, had been increasing at an average annual rate of 2.5 percent (1994-2003).
ERS research expands on the analysis of changes in aggregate food
prices by looking at which food categories experience substantial price
changes, how consumers spend their incomes on food, and how and why consumption
patterns change. Food prices are also affected by structural conditions
in the food production industry, prices farmers receive for their commodities,
marketing costs, and consumer demand for food. More
overview...
contents
features
How Much Do Americans Pay for Fruits and Vegetables?—One argument for not consuming fruits and vegetables is that they are too expensive, especially when fresh. Yet among 154 forms of fruits and vegetables priced using ACNeilsen Homescan data, more than half were estimated to cost 25 cents or less per serving. Consumers can meet the recommendation of three servings of fruits and four servings of vegetables daily for 64 cents. The related data product is a collection of spreadsheets that contain all the data used in the report and are presented to show exactly how ERS arrived at the costs per serving figures.
A Workshop on the Use of Scanner Data in Policy Analysis— As markets become more segmented and contracts replace spot market transactions,
the declining volume of available data associated with spot transactions
becomes less representative and therefore less useful for research. As
a result, researchers are increasingly turning to retail scanner data
to decipher market workings. Not only are such data plentiful (although
expensive), but with links to demographics of individual households, the
data provide a window on distributional issues. The voluminous quantity
of the data, while an asset, can also present researchers with special
challenges. In June 2003, the Economic Research Service and the Farm Foundation conducted a workshop on use of household scanner data in food policy analysis. The workshop provided a forum for participants to discuss strategies in using scanner data. Panels and presentations were led by representatives from the Federal Government and higher education. An agenda, paper abstracts, and participant bios are available.
U.S. Fresh Produce Markets: Marketing
Channels, Trade Practices, and Retail Pricing Behavior—Retail
consolidation, changing consumer demand, marketing practices, and new
technology have transformed U.S. fresh fruit and vegetable markets in
the past decade. This capstone report synthesizes results of a multiphase
project that examined the dynamics of produce markets, the produce shipper-retailer
relationship, and how these changes affect the relative market influence
of producers, retailers, and consumers. See The
ERS produce markets project for background information and a complete
list of publications related to the project.
Spending on
food away from home was 47 percent of the $948.6 billion in total food
expenditures in 2003—Spending for food away from home was 47
percent of the food dollar and spending for food at home was 53 percent.
Families spent only 10.1 percent of their 2003
disposable personal income on food—As disposable personal income
continues to climb, the share spent on food declines. 
The online version of ERS's magazine, Amber
Waves, includes articles on the determinants
of food prices, consumer-driven
agriculture, calculating the food marketing bill. Articles also highlight the Retail
Meat Scanner Data, and go behind the Meat Price Spread data.
recommended readings
Exploring Food Purchase Behavior of Low-Income
Households: How Do They Economize?—A comparison of purchases
by U.S. households of different income levels, finds that low-income shoppers
spend less on food purchases despite facing generally higher purchase
prices. Households can economize on food spending by purchasing more discounted
products, favoring private-label products over brand name products, pursuing
volume discounts, or settling for a less expensive product within a product
class.
Retail Food Price Forecasting at ERS:
The Process, Methodology, and Performance from 1984 to 1997—ERS
periodically evaluates current forecasting procedures for the CPI for
food to determine if alternative procedures should be incorporated. Intentions
of this study were to evaluate past forecasting performances, identifying
areas where improvements could be made, and to document the current forecasting
procedures to users of the information.
See all recommended readings...
recommended data products
Food CPI Forecasts—2004
and 2005 forecasts for all food, food away from home, food at home, and 15 selected
food categories.
ERS Food Expenditure Tables—Food expenditures
estimated by ERS from data that measure current sales or receipts by each
type of store that sells food. This method provides the most direct measurement
of food expenditures.
Food Market Indicators—Overall statistics describing economic activity related to food production and distribution from the farm to the domestic or international consumer. The database provides information on the supply, demand, structure, and economic health of the U.S. food system and indicators that are useful in determining how well the system serves its consumers and producers. A related report, The U.S. Food Marketing System, 2002, has chapters on food manufacturing, wholesaling, grocery retailing, and food service.
Food Baseline Projections—Projections
for the U.S. agricultural sector 10 years ahead, including crop production,
agricultural trade, farm income, and food prices. Projections are a description
of what would be expected to happen under the 2002 Farm Act, with very
specific external circumstances.
recent research developments
Minimum Wage and Food Prices:
An Analysis of Price Pass-Through Effects—This article in International
Food and Agribusiness Management Review explores the possibility that
because lower income households spend a proportionately larger share of
their income on food, the higher income from an increase in the minimum
wage may be offset by resulting higher food costs and finds that under
normal economic conditions it is unlikely that higher food costs would
fully offset the wage gains of minimum wage workers. Contact Gerald Schluter for more information.
related briefing rooms
related links
Experimental CPI Using Geometric
Means—Provides background at BLS website on the geometric mean
formula use in the CPI. Although the geometric formula was experimental
at one time, it was adopted by the BLS for some categories of the official
CPI index in January 1999.
Average Retail
Food Prices—Average retail prices estimated by the Bureau of
Labor Statistics from Consumer Price Index data for selected food items.
BLS Consumer Expenditure Survey—Program
consists of two surveys (the quarterly Interview survey and the Diary
survey) that provide information on the buying habits of American consumers,
including data on their expenditures, income, and consumer unit (families
and single consumers) characteristics.
for more information, contact:
Annette Clauson or Ephraim
Leibtag
web administration: webadmin@ers.usda.gov
page updated:
August 18, 2004
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