The Outlook for Grocery Prices and Eggs (pre-tariff)

So much for grocery prices dropping on day one. Some forecasts from ERS, TradingEconomics:

Figure 1:  CPI food-at-home component (bold black), ERS January forecast (light blue square), ERS February forecast (red triangle), ARIMA(1,1,0) forecast (chartreuse line). Source: BLS, ERS, author’ calculations.

The February 95% prediction interval includes a 0.2% drop, as well as a 7% increase.

What about egg prices? The ERS February forecast for end-of-year is now higher than the January, at 41%.

Figure 2: Average price of dozen eggs (blue), ERS January forecast (blue square), ERS February forecast (green inverted triangle), implied TradingEconomics forecast of 3/4 (red triangle).  Source: BLS, ERS, TradingEconomics, and author’s calculations.

TradingEconomics forecast is for an 86% increase year-over-year, almost double that from ERS.

Should tariffs stay in place for Mexican imports, one should expect forecasted grocery prices to rise further.