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American consumers celebrate first calendar year drop in food prices in 50 years

WASHINGTON, D.C. – For the first time in 50 years, American consumers can celebrate a drop in food prices over a calendar year.

The United States Department of Agriculture Economic Research Service reports that food-at-home prices declined overall in 2016, falling 1.3 percent below 2015 levels. This marks the first annual decline in supermarket prices since 1967. Looking at specific retail food categories, prices declined 21.1 percent for eggs, 6.3 percent for beef and veal, 4.1 percent for pork, and 2.3 percent for dairy and related products. However, not all foods declined in price—fresh fruit prices rose 2.2 percent and other foods rose 0.3 percent compared with 2015 prices.

The overall decline in retail food prices was due to several factors: increased production for many commodities, lower transportation costs as a result of deflated oil prices, and a strong U.S. dollar. A strong dollar affects domestic prices as it makes U.S. goods less desirable to foreign markets, leaving more potential exports on the domestic market.

Wendy’s restaurant in Mason City, Iowa

While food-at-home prices declined in 2016, prices for food away from home increased 2.6 percent. Restaurant prices have been rising consistently month-over-month due, in part, to differences in the cost structure of restaurants versus supermarkets or grocery stores. Restaurant prices primarily comprise labor and rental costs with only a small portion going toward food. For this reason, decreasing farm-level and wholesale food prices have had less of an impact on restaurant menu prices.

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