The CPI for all food was unchanged from June to July, increased 0.1 percent from May to June, and is now 2.3 percent above the July 2011 level. The food-at-home CPI fell 0.1 percent in July and is up 1.9 percent from last July, while the food-away-from-home (restaurant) index increased 0.2 percent in July and is up 2.9 percent from last July. The all-items CPI was down 0.2 percent in July and is 1.4 percent above the July 2011 level. The year-over-year increase in the food-at-home CPI has fallen each month so far in 2012, indicating that food price inflation has slowed down since 2011 and that the impact of the recent drought has yet to materialize in retail food prices.
Beef prices were up 0.6 percent in July and are 6.6 percent above last July, with steak prices up 8.9 percent and ground beef prices up 5.8 percent. The current drought is anticipated to reduce cattle herd sizes due to increased feed costs which is expected, in turn, to increase the retail beef supply and reduce prices somewhat in the short term. Pork prices increased 0.4 percent in July and are 1 percent below last July's level. Retail prices have started to fall in accordance with wholesale prices, but a turn-around at all stages of production is likely as feed costs rise. Poultry prices increased 1.2 percent in July and are 6.1 percent above prices last year at this time, with chicken prices up 5.5 percent and other poultry prices (including turkey) up 8.2 percent. The poultry category is expected to be among the first to reflect price increases due to the drought.
Egg prices decreased 0.3 percent in July; egg prices are now 2.4 percent above the July 2011 level. Egg price inflation is returning to historically average levels, as the domestic inventory of egg-laying hens in the U.S. continues to increase.
Fish and seafood prices were up 0.2 percent from June to July and are 1.6 percent above the July 2011 level. Inflation has been lower than expected thus far in 2012, and ERS has revised the 2012 forecast downward to 3 to 4 percent.
Dairy prices were down 0.5 percent from June to July, compared with a 0.3-percent decrease from May to June. Dairy prices are now 0.2 percent below the July 2011 level. Within the dairy category, prices changed as follows in July: milk prices were up 0.3 percent and are 1.9 percent below last July's prices; cheese prices were down 1.1 percent and are 1.3 percent below last July's level; ice cream and related product prices were down 0.5 percent and are 2.5 percent above last July's level; and butter prices increased 0.7 percent this month and are 11.7 percent below last July. Fluid milk prices have followed a downward trajectory for most of 2012, as production has increased and exports have fallen. However, higher feed costs will have a direct effect on the dairy industry, and dairy prices may begin to rise as the impact of the drought is incorporated into the production supply chain.
Fresh fruit prices decreased 2.3 percent in July, and the fresh fruit index is down 1 percent overall from last year at this time, with apple prices up 9.8 percent, banana prices up 0.2 percent, citrus fruit prices up 1 percent, and other fresh fruit prices down 8 percent. The fresh vegetable index decreased 0.2 percent in July, after increasing for the first time in June. Since last year at this time, fresh vegetable prices are down 2.5 percent, with potato prices down 7.9 percent, lettuce prices down 3.2 percent, tomato prices down 1.7 percent, and other fresh vegetable prices down 0.5 percent. Unseasonably warm weather and favorable growing conditions thus far in 2012 have resulted in prices and output for many vegetable crops that contrast sharply with prices and output for this time last year. Processed fruit and vegetable prices fell 1.0 percent in July and are 2.9 percent above the July 2011 level. Longer-term contracts within the processed fruit and vegetable industry kept price inflation below that for fresh fruits and vegetables throughout 2011. However, 2012 prices are expected to reflect increased fuel and commodity costs, and inflation is currently running above that of fresh produce.
Cereal and bakery product prices increased 0.4 percent from June to July and are up 2.9 percent from last year at this time, with bread prices up 3.2 percent and breakfast cereal prices up 2.7 percent over the past year. Sugar and sweets prices were up 0.4 percent in July and are 4.4 percent above this time last year. Prices for nonalcoholic beverages, including coffee and carbonated beverages, are down 0.2 percent in July and are down 0.3 percent from last year.
The index for fats and oils was unchanged from June to July and is 4.9 percent above the July 2011 level. The significant price increases in 2011 were due in large part to surging soybean prices. Soybean prices face pressure in 2012 from both decreased production in South America as well as the drought in the U.S.