USDA Raises 2026 Food Inflation Forecast as Grocery Costs Accelerate
Beef prices projected for biggest annual increase in decades while grocery inflation moves above long-term averages
USDA sharply raised its outlook for 2026 food inflation, warning that grocery prices and overall food costs are now expected to rise faster than their long-term averages as consumers continue to face pressure from elevated meat and energy costs.
USDA now forecasts overall food prices to increase 3.4% in 2026, up from a 2.9% estimate in April.
Grocery, or food-at-home, prices are projected to rise 3.2%, compared to the prior 2.4% forecast.
Restaurant, or food-away-from-home, prices are expected to increase 3.5%, slightly below the previous estimate of 3.6%.
The updated projections place both overall food inflation and grocery inflation above their respective 20-year averages of 3% and 2.6%. USDA said the latest grocery inflation outlook is the highest since the agency began issuing 2026 forecasts in July 2025.
A major driver remains beef prices, which USDA now expects to climb 12.1% this year. That would match the surge seen in 2014 and would mark the largest annual increase since 1979, when beef prices jumped 27.4%. Retail beef prices in April alone rose 3.1% from March and were nearly 15% above year-ago levels.
USDA pointed to historically tight cattle supplies as the central factor behind the rally, though it also emphasized that consumer demand for beef has remained resilient despite higher prices. Because beef carries a sizable weighting in the government’s food inflation calculations, the category is expected to have an outsized impact on overall grocery costs throughout the year.
Among the 15 major grocery categories tracked by USDA, nine are now forecast to rise faster than their historical averages, including beef and veal, fish and seafood, fresh fruits and vegetables, processed produce, sugar and sweets, and nonalcoholic beverages. Prices for pork, poultry, and bakery goods are expected to rise more modestly, while eggs, dairy products, and fats and oils are forecast to decline from 2025 levels.
Egg prices are projected to post the largest annual decline in USDA records dating back to 1974, falling 29.8% after surging 21.4% in 2025 amid widespread Highly Pathogenic Avian Influenza (HPAI) outbreaks. USDA said fewer HPAI detections this year, along with improved replacement flock availability, are allowing egg production to recover more rapidly.
The agency also noted that grocery prices still account for roughly 61% of total food spending, compared to about 39% for restaurant spending, underscoring the broader economic impact of sustained increases at supermarkets.
Meanwhile, USDA warned that higher fuel costs could further intensify food inflation pressures if energy prices remain elevated, as transportation and distribution expenses continue filtering through the food supply chain.
