USDA: Supermarket prices spiked in 2020 but might go back down some in 2021

The average cost of prices at grocery stores and in restaurants spiked in 2020 but might go back down some in 2021, according to a new report by the Agriculture Department's Economic Research Service. 

"According to USDA data released last week, the Consumer Price Index for grocery store or supermarket food purchases last year was up 3.5 percent: That's not only a significant jump from 2019, where these retail "food-at-home" prices were up only 0.9% from the year before, but also well above the 20 year annual average of 2.0% and the highest annual increase since 2011," Mike Pomranz reports for Food & Wine. "Meanwhile, the cost of restaurant purchases saw a similar spike, up 3.4% over the past year, meaning Americans were likely paying more for food wherever they went."

The price increases were driven partly by the pandemic's affect on supply chains and labor, but also by changes in consumer habits. "Stay-at-home mandates in 2020 increased demand for several food products in retail stores, rather than at restaurants and schools," said the report. "Supply chains struggled to adapt to this transition, which put upward pressure on retail prices."

Meat prices showed an especially dramatic increase, though almost all other food categories went up in price except fruit, the report says. Meatpacking plants were hard-hit during the pandemic and were often obliged to temporarily close or reduce production for safety reasons, Pomranz reports.