U.S. Food Costs to Rise Nearly 5 Percent Amid Record Inflation: Report

Food prices are expected to keep rising this year, the U.S. Department of Agriculture (USDA) said in a report released Friday.

The USDA predicts grocery store and supermarket prices will increase by another 3 to 4 percent in 2022 and are "expected to exceed historical averages and the inflation rate in 2021." The report also said the Consumer Price Index, an overall measure of economy-wide inflation, increased by 7.9 percent between February 2021 and February 2022.

The USDA said the food price increases were due to rises in costs in many different food categories—such as chickens, eggs and dairy—rather than just one or a few. It added that while the Federal Reserve's recent decision to increase interest rates will put "downward pressure" on prices, the war in Ukraine has been a major factor exerting "upward pressure" on them.

As one of the world's top four suppliers of grain, Ukraine has been called the "breadbasket" of Europe. It is also the world's largest producer of sunflower oil. In a statement, U.N. World Food Program Executive Director David Beasley said the interruption in Ukraine's food output "will increase prices and add further fuel to food inflation at a time when its affordability is a concern across the globe."

Because of this, the USDA predicts that farm-level wheat prices will increase between 20 and 23 percent this year and that wholesale wheat flour prices will increase between 12 and 15 percent.

USDA Predicts Food Cost Increases
The U.S. Department of Agriculture said Friday that food prices are expected to keep rising this year. Above, shoppers at a supermarket in Chevy Chase, Maryland, on February 17. Photo by Mandel Ngan/AFP via Getty Images

The USDA report added that restaurant food prices are expected to increase even more than grocery store prices, by 5.5 to 6.5 percent. That puts the total food price increase prediction at between 4.5 and 5.5 percent.

Another factor putting pressure on the food market is a recent outbreak of avian influenza, which has caused more than 22 million chickens and turkeys in at least 24 states to be culled to keep the disease from spreading.

Because of the reduction in supply brought on by the avian flu, poultry prices are expected to increase by 6 to 7 percent this year, the USDA report said. Egg prices are predicted to rise by 2.5 to 3.5 percent.

Nearly every food category—such as fresh and processed fruits, sweets, cereals and bakery products—is expected to increase in price this year, according to the report. The only category it said would have a lesser increase than last year was fresh vegetables, which are expected to have a 1 to 2 percent increase, compared with 2021's 1.5 to 2.5 percent.

Update 4/8/22, 11:45 a.m. ET: This story was updated to add more information and background.