U.S. Food Price Inflation and Agriculture Policy

U.S. Food Price Inflation and Agriculture Policy

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INSIGHTi

U.S. Food Price Inflation and Agriculture
Policy
June 3, 2022
U.S. food price inflation has accelerated in 2022 (Figure 1). The U.S. Consumer Price Index (CPI) for
food rose by 9.4% between April 2021 and April 2022, the largest 12-month increase between
consecutive Aprils since 1981. Current food price inflation can be due to general inflationary pressure on
the economy as well as food-specific factors, which may vary by the type of food. Rising food prices
present challenges for many U.S. consumers, particularly low-income consumers.
Figure 1. Inflation for Core and Food Price Indices, 1980-2022

Source: CRS using data from the U.S. Bureau of Labor Statistics, downloaded on May 6, 2022.
Notes: Values are measured as the percentage change between Aprils of each year. Core inflation measures the change in
prices for all goods excluding food and energy.
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Food Price Inflation and Effects on Consumers
U.S. consumers experienced unusually large year-over-year food price increases between April 2021 and
April 2022 (Table 1). Prices increased for all categories of food purchased for home consumption as well
as for food consumed away from home.
Table 1. Consumer Food Price Inflation in the United States by Selected Food Category
20-Year Historical
Retail Food Price
Change from April 2021
Average Annual Price
Category
Subcategory
to April 2022
Change
Food purchased for home

consumption
10.8%
2.0%

Eggs
22.6%
3.2%

Fats and oils
15.3%
2.3%

Poultry
15.3%
2.3%

Beef and veal
14.3%
4.4%

Pork
13.7%
2.2%

Fish and seafood
11.9%
2.7%

Cereals and bakery products
10.3%
2.1%

Nonalcoholic beverages
9.8%
1.4%

Dairy products
9.1%
1.7%

Sugar and sweets
8.0%
2.1%

Fruits and vegetables
7.4%
2.0%
Food consumed away from

home
7.2%
2.9%
All food

9.4%
2.4%
Source: USDA Economic Research Service (ERS), Consumer Price Index, Changes in Food Price Indexes, 2019 through
2022, updated May 25, 2022.
Notes: Consumer price indices measure the average change in the prices paid by urban consumers for a basket of
consumer goods and services.
Inflation causes consumers to spend more to purchase the same basket of groceries. Since 2000, U.S.
households on average spent less than 10% of their disposable income on food; however, low-income
households may spend a larger share on food. In 2020, households in the lowest income quintile spent
27% on food, compared with 7% for the highest income quintile. Higher food prices may also increase
consumers’ use of food banks and decrease the amount that food banks can purchase.
U.S. Food Supply
Most of the U.S. food supply is produced domestically. Imports accounted for approximately 15% of the
food supply, and relatively more of fruits, vegetables, and seafood. While experts do not expect to see
food shortages in the United States, some food manufacturers may be impacted by supply chain issues for
certain inputs such as sunflower seed oil, aluminum for cans, and packaging. U.S. food manufacturers
may also face competition from nonfood manufacturers for supplies that are used for animal feeds,
biofuels, and industrial purposes.

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Drivers of U.S. Food Price Inflation
Farm-level input costs and wholesale prices of commodities used in food have also experienced unusually
large year-over-year price increases (Table 2). Many factors are contributing to inflation in the United
States, including supply and demand imbalances from the COVID-19 pandemic and higher energy prices.
Nonfarm labor costs increased 7.3% between 2021 and 2022. Delays continue to impact international
container and U.S. rail shipments, leading to higher shipping costs. Additionally, Russia’s invasion of
Ukraine has disrupted global trade patterns, leading to higher agricultural commodity and fertilizer prices
and global food prices. An outbreak of highly pathogenic avian influenza is contributing to higher prices
for eggs and poultry.
Table 2. Producer Price Inflation in the United States by Selected Food Category
20-Year Historical
Food Supply Input Price
Change from April 2021
Average Annual Price
Supply Chain Stage
Category
to April 2022
Change
Farm level

Eggs
220.1%
6.9%

Wheat
84.8%
6.9%

Vegetables
45.7%
3.6%

Milk
32.5%
2.7%

Soybeans
18.1%
7.6%

Fruits
17.3%
2.4%

Cattle
16.8%
3.2%
Wholesale level

Fats and oils
40.5%
7.2%

Wheat flour
40.3%
4.6%

Poultry
24.1%
2.5%

Dairy
20.4%
2.1%

Beef
4.0%
4.5%

Pork
-1.4%
2.4%
Overall

Unprocessed foods and
animal feed
34.8%
3.8%

Processed foods and animal
feed
17.4%
3.5%

Finished consumer foods
15.8%
2.5%
Source: CRS using data from USDA Economic Research Service (ERS), Changes in Producer Price Indexes, 2019 through
2022, updated May 25, 2022.
Notes: Producer price indices measure the average change in the prices received by domestic producers for their output.
Producer price inflation may not necessarily lead to higher consumer prices. Typically, on-farm activities
account for $0.16 out of a dollar spent on food in the United States. The extent to which increases in
agricultural commodity costs translate into increases in consumer food prices

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may vary across food categories, depending on the amount of processing and the extent that higher costs
can be passed along to buyers.
Policy Considerations
On May 5, 2022, the Federal Reserve increased interest rates in an effort to decrease inflationary
pressures. The effect of these monetary policy actions on U.S. food price inflation may be complicated by
tight global supplies of agricultural commodities and high wholesale prices. The Federal Reserve’s
actions may cause the U.S. dollar to appreciate against other currencies, which could reduce demand for
U.S. exports and weigh on farm-level prices.
Federal nutrition and agricultural fiscal policies target different aspects of the food economy, with indirect
effects on food price inflation:
 Nutrition policy in the farm bill provides a number of programs for low-income and
vulnerable consumers, including the Supplemental Nutrition Assistance Program. These
improve household food security and increase food demand.
 Livestock and poultry marketing policy regulates competition in the meat supply chain.
The Biden Administration has asserted that market consolidation contributes to food price
inflation, and has taken action to expand processing capacity at smaller-scale facilities.
 Farm support policy provides a “safety net” to defray the cost of managing risk and
encourage production, which may increase the long-term supply of inputs to the food
supply chain and potentially reduce food prices. On May 11, the Biden Administration
announced new incentives to increase domestic agricultural and fertilizer production, but
their effects may not be realized before 2023.
Other aspects of federal policymaking—such as energy, transportation, and trade—may influence the
supply, demand, and prices of food inputs, and thereby impact short-term U.S. food price inflation.

Author Information

Stephanie Rosch
Jim Monke
Analyst in Agricultural Policy
Specialist in Agricultural Policy

Disclaimer
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