Deflationary blues: What will food prices do in 2017?

By Elaine Watson

- Last updated on GMT

Deflationary blues: What will food prices do in 2017?

Related tags Inflation Consumer price index

Thought food deflation was finally easing? Apparently not, according to the latest figures from the Bureau of Labor Statistics, which reveal that while protein deflation eased off very slightly, the Consumer Price Index (CPI) for food-at-home — a proxy for grocery-level inflation — continued to decline in November. 

The index for food-at-home during November declined by 0.1% vs the previous month, marking the seventh straight month-to-month drop in retail prices.

The index for dairy and related products fell 0.6% in November after rising in September and October. The fruits and vegetables index fell 0.2% after rising 0.2% in October. The index for other food at home fell 0.3%, and the index for meats, poultry, fish, and eggs declined 0.1%.

However, the index for nonalcoholic beverages increased in November, rising 0.3% after declining in five of the last six months. The index for cereals and bakery products also rose, increasing 0.1%. 

Over the past 12 months, the food at home index declined 2.2%. The index for meats, poultry, fish, and eggs posted the largest decline, decreasing 6%. The index for food away from home, in contrast, rose 2.3% over the past 12 months.  

However, analysts say the Producer Price Index figures (+0.6% for food) released on Monday​ suggest things could improve by spring of 2017 and that inflation could return by the second half of the year.  

The Consumer Price Index (CPI) is a measure of the average change in prices over time of goods and services purchased by households.

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