Incensation is an expression of reverence and prayer according to the GIRM.
The general instructions of the Roman Missal (GIRM) would allow incensation of the congregation as part of the preparation of gifts: gifts, altar, cross, priests and people.
In the Order of Christian Funerals, incensation of the body takes place at the entrance rites or in the rites of farewell, and it is discretionary.
As to the liturgy of the Eucharist, the OCF merely says the liturgy continues as usual and does not expressly reference incensation of the body at that time.
The priest appears to have added an incensation of the body to the other incensations as above in the GIRM. While a liturgical expert could better address this, I do not believe what the priest did was contrary to the rubrics or an egregious violation of liturgical principles. The usual action could be quite appropriate.