Food Prices Rose Modestly

F ood prices, as measured by the Consumer Price Index (CPI), rose 2.4 percent in 1994, slightly higher than 1993's 2.2-percent rise. These increases followed 1992's 25-year record low of 1.2 percent, but were moderate compared with the almost 6-percent rise in 1990. Retail prices for some products, however, increased considerablyfish and seafood up 4.5 percent, fresh fruits 6.5 percent, canned and frozen vegetables 4.4 percent, cereals and bakery products 4.1 percent, and nonalcoholic beverages 7.5 percent. But record-high com and soybean harvests, combined with a record-large meat supply in 1994, helped hold down overall food prices. And, the forecast for food-price increases remains moderate. U.S. food prices in 1995 are projected to increase about the same as the overall CPI (fig. 1). The overall consumer- price inflation rate is projected at about 3.0 percent in 1995, up from 2.6 percent in 1994. Overall food prices are forecast to rise 2.5- 3.5 percent in 1995, slightly above the last 4 years. The general economy will likely expand more slowly than in 1994, and employment will rise only slightly. Slow growth in the economy translates into small rises in disposable income. The resulting moderate consumer demand adds little upward pressure on food prices.