US food prices are set to climb further through 2026 and into 2027, according to the latest USDA Food Price Outlook, with grocery and restaurant inflation expected to remain above long-term historical averages.
The updated forecast points to higher costs across several key food categories, adding pressure for retailers, suppliers and consumers as the industry continues to navigate inflation, supply constraints and changing shopping habits.
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The US Department of Agriculture’s Economic Research Service (ERS) now expects overall food prices to increase by 3.1% in 2026, while food purchased for home consumption, commonly tracked as grocery prices, is forecast to rise 2.7%.
Prices for food consumed away from home, including restaurants and foodservice, are projected to increase 3.5%. The agency is also forecasting a further 3.1% increase in overall food prices during 2027, although it notes that the longer-term outlook carries greater uncertainty.
Grocery inflation remains uneven
The USDA said food inflation continues to vary significantly between product categories, creating a mixed picture for retailers managing pricing, promotions and inventory.
Fresh vegetables are expected to record one of the largest increases, with retail prices forecast to rise 6.8% during 2026. Sugar and sweets are projected to increase 7.2%, largely because of higher prices for confectionery products, including chocolate.
Non-alcoholic beverages are forecast to become 3.9% more expensive, reflecting higher costs for coffee, tea and other beverage materials. Fresh fruit prices are expected to rise more modestly, by around 2%.
The agency also highlighted notable differences within individual products. Retail lettuce prices in June were 32.1% higher than a year earlier, while tomatoes rose 19.5% over the same period. Fresh potato prices, by comparison, increased only 1.4% year on year.
“The level of food price inflation varied,” the USDA said, reflecting ongoing differences between food categories and commodity markets.
Retailers face continued cost pressure
The latest outlook suggests US retailers will continue to balance rising supplier costs against increasingly price-sensitive consumer demand.
Although monthly food inflation has eased compared with the sharp increases seen in recent years, the USDA said food prices continued to rise during June. The Consumer Price Index for all food increased 0.2% from May, while prices were 3% higher than a year earlier. Grocery prices and restaurant prices each rose 0.2% during the month.
For retailers, uneven inflation across food categories is likely to influence merchandising strategies, promotional activity and private-label development as shoppers continue to seek value.
Industry data has shown consumers increasingly switching to lower-priced products and discount retailers after several years of elevated grocery inflation.
Forecast points to sustained food price growth
The USDA said its Food Price Outlook combines recent Consumer Price Index and Producer Price Index data with forecasts covering up to 18 months ahead. The agency stressed that its projections include statistical ranges and may be revised as economic conditions, commodity markets and production costs evolve.
While the projected increases are lower than the peaks experienced during the recent inflation surge, they indicate that US food inflation is expected to remain above its long-term average in the near term.
For food retailers and suppliers, continued price growth is likely to keep cost management, sourcing and value-focused retail strategies high on the agenda.
“The Food Price Outlook tracks and forecasts the annual percentage change in food prices,” the USDA said, providing monthly updates as new inflation data becomes available.
