USDA Lifts Food Inflation Outlook Above Long-Term Norms
Beef surge drives upward revisions while eggs, dairy and fats offer limited relief
USDA’s latest Food Price Outlook points to a renewed acceleration in food inflation for 2026, with all major categories — groceries, restaurants, and overall food — now projected to rise well above their 20-year averages.
•All food prices are forecast to increase 3.6% in 2026, up from 3.1% in February and above the 20-year average of 3.0%.
• Food away from home (restaurants) is seen rising 3.9%, topping the 3.5% historical average.
• Food at home (groceries) is projected up 3.1%, exceeding the 2.6% long-run norm.
Beef leads broad-based grocery inflation. The sharpest upward revision comes from beef and veal, now expected to jump 10.1%, nearly double USDA’s February forecast and marking the largest increase for any category.
•Beef’s surge reflects tight cattle supplies and would represent the biggest annual gain since 2014.
• Broader meats, poultry, and fish inflation was revised lower to 3.0%, though still a key contributor to overall food costs.
• Fish and seafood prices are expected to rise 4.3%, while pork (+1.3%) and poultry (+0.3%) show more modest gains.
Across grocery categories, 8 of 15 are now projected to rise faster than their historical averages, including fresh vegetables, processed foods, cereals, and beverages — signaling persistent, widespread price pressure.
Eggs, dairy, and fats provide limited downside. USDA continues to project price declines in a handful of categories:
•Egg prices are forecast to fall 26.8%, even with ongoing highly pathogenic avian influenza (HPAI) detections, as production rebounds.
•Dairy products and fats and oils are also expected to decline modestly.
These declines, however, are not enough to offset broader inflation across most food categories.
The expected drop in egg prices would mark the largest annual decline since 1974, following multiple years of steep increases.
Processed foods and produce add pressure.
•The “other foods” category — including processed and convenience items — is now seen rising 3.0%, double the prior forecast and a major driver of grocery inflation.
• Fruits and vegetables are projected up 2.5%, with fresh produce leading gains.
Inflation outlook climbs despite incomplete war impact. The revised forecasts place 2026 food inflation above 2025 levels and reinforce growing pressure on household budgets already strained by higher fuel costs tied to the Middle East conflict. However, USDA notes the outlook only incorporates CPI and PPI data through February — meaning any additional war-driven increases in energy, transportation, or inputs like fertilizer are not yet reflected.
Bottom Line: Food inflation in 2026 is becoming more entrenched and broad-based, led by a sharp spike in beef prices and rising costs across processed foods and produce. While declines in eggs and select categories offer some relief, they are unlikely to materially offset the upward pressure facing consumers.
