USDA Lowers 2026 Food Inflation Outlook
Revised forecasts show price growth moderating toward long-term averages as declines emerge in key categories
USDA has revised its 2026 food price outlook lower, signaling easing inflation pressures across grocery stores and restaurants. Updated projections show overall food prices rising closer to their 20-year averages, with notable downward revisions in several key categories, including beef and eggs.
USDA now expects all food prices to increase 2.9% in 2026, down from a 3.6% forecast in March.
Grocery prices, or food at home, are projected to rise 2.4%, compared to the prior estimate of 3.1%.
Restaurant prices, or food away from home, are seen increasing 3.6%, slightly below the earlier 3.9% forecast.
Perspective: If realized, these figures would align closely with long-term averages of 3.0% for all food, 2.6% for groceries, and 3.5% for restaurants.
Within food categories, price trends remain mixed. Seven categories — including beef and veal, fish and seafood, fresh vegetables, processed fruits and vegetables, sugar and sweets, nonalcoholic beverages, and other foods — are expected to rise faster than their historical averages. Meanwhile, pork, poultry, cereal and bakery products, fresh fruits, and other meats are forecast to increase at a slower pace than usual.
Only a handful of categories are projected to decline outright in 2026. Egg prices are expected to fall sharply by 29.4%, a deeper drop than previously anticipated, while dairy prices are forecast to decline 1.4%, and fats and oils are expected to decrease modestly by 0.8%. These declines reflect improving supply conditions and easing pressures from prior disruptions.
Beef prices, while still rising, are now expected to increase at a more moderate pace. USDA forecasts a 6.3% increase in retail beef and veal prices, a significant reduction from the 10.1% increase projected in March. Despite stable cattle inventories, consumer demand has remained firm, supporting prices even as the rate of increase slows. Pork prices are also expected to see minimal growth, rising just 0.4% in 2026.
The outlook for eggs and poultry continues to be shaped by the ongoing highly pathogenic avian influenza (HPAI) outbreak in the U.S. However, USDA noted fewer new detections in early 2026 compared to the same period in 2025, along with sufficient availability of replacement birds to maintain production. As a result, egg prices are expected to fall more sharply than previously forecast, while poultry prices are projected to rise modestly by 0.7%.
A broad category labeled “other foods,” which accounts for roughly 12.5% of the food price index, is expected to increase 3.3% in 2026. This category includes a wide range of processed and packaged items such as frozen meals, snacks, sauces, baby food, condiments, and prepared foods, making it a significant contributor to overall food inflation trends.
Meanwhile, the overall composition of food spending remains unchanged, with grocery purchases accounting for 60.9% of total food expenditures and restaurant spending making up the remaining 39.1%.
Bottom Line: Despite the more moderate outlook, USDA cautions that food price forecasts have become increasingly volatile. Data disruptions during the fall 2025 government shutdown required the use of statistical models to estimate missing Consumer Price Index figures, and monthly forecast revisions have varied significantly since a new methodology was introduced in 2023. This suggests that further adjustments are likely as market conditions continue to evolve.
