USDA’s First 2027 Food Inflation Forecast Puts Beef and Eggs in Focus
Beef may stay costly as egg prices stabilize after a historic retreat
ANALYSIS | July 20, 2026
USDA’s Economic Research Service on Friday is scheduled to publish its first Food Price Outlook for 2027, giving consumers, food companies and agricultural markets an initial benchmark for next year’s grocery and restaurant inflation. The debut forecast is likely to be deliberately restrained: it will be based on statistical trends through June 2026, with no observed 2027 prices, and should carry wide prediction intervals. The headline may therefore look relatively calm even as beef, eggs, fresh vegetables, coffee and sugar tell much more volatile stories.
The central question is not simply whether food inflation rises or falls in 2027, but where pressure shifts. Beef prices are still being supported by historically tight cattle supplies, while eggs are emerging from an extraordinary 2025 price spike and 2026 correction. That combination could leave USDA forecasting moderate overall food inflation while showing continued pain in beef and a return to positive, but highly uncertain, egg inflation.
A first forecast built to change
USDA begins forecasting the following calendar year each July and updates the estimate monthly. The Food Price Outlook measures the annual average price level compared with the prior year; it is not a December-to-December forecast and it is not a prediction of what prices will do in the month the report is released. That distinction matters because sharp base effects can make annual inflation look very different from the latest monthly move.
The June 2026 Food Price Outlook projected all-food prices to rise 3.2% this year, including a 2.8% increase for food at home and a 3.6% increase for food away from home. June consumer-price data released afterward showed food-at-home prices 2.7% above a year earlier and restaurant prices 3.4% higher. Those readings are close to USDA’s current annual forecasts, which argues against a dramatic change in the broad 2026 outlook on Friday.
However, category-level inflation remains unusually uneven. Retail beef and veal prices were 11.8% above June 2025, while egg prices were 27.9% lower. Fresh vegetables were up 9.9%, sugar and sweets were up 6.9%, and coffee was up 12.9%. A single all-food number will mask those differences.
Current signals shaping USDA’s 2027 starting point
| Category | Latest CPI signal | USDA 2026 forecast | Likely 2027 interpretation |
| All food | +3.0% year over year in June | +3.2% (2.2% to 4.2%) | A cautious opening forecast near recent norms is more likely than a dramatic reacceleration. |
| Food at home | +2.7% year over year; +0.2% in June | +2.8% (1.4% to 4.4%) | The aggregate grocery forecast may remain moderate even if a few high-profile categories stay expensive. |
| Food away from home | +3.4% year over year; +0.2% in June | +3.6% (3.0% to 4.2%) | Restaurant inflation should remain stickier than grocery inflation because labor, rent, insurance and utilities adjust slowly. |
| Beef and veal | +11.8% year over year; +1.2% in June | +7.5% (3.1% to 12.2%) | Continued positive inflation is likely, although the rate may slow from 2026 as the comparison base rises. |
| Eggs | -27.9% year over year; +4.3% in June | -30.4% (-37.7% to -21.1%) | The 2027 forecast may turn positive as the 2026 low base replaces the 2025 spike, but HPAI keeps the range unusually wide. |
| Fresh vegetables | +9.9% year over year; -1.4% in June | +7.7% (4.5% to 11.1%) | Weather, imports and seasonal supply make this one of the most volatile categories and a major source of forecast revisions. |
| Sugar and sweets | +6.9% year over year; +0.6% in June | +6.9% (5.2% to 8.7%) | Candy and confectionery costs may stay elevated even if broader grocery inflation cools. |
| Nonalcoholic beverages | +2.9% year over year; coffee +12.9% | +5.7% (4.0% to 7.5%) | Coffee remains the key upside risk, although June’s monthly decline suggests some near-term easing. |
Sources: Bureau of Labor Statistics, June 2026 CPI; USDA Economic Research Service, June 2026 Food Price Outlook. USDA ranges are 95% prediction intervals.
Beef: the most persistent grocery store pressure
Beef is the clearest reason USDA may be reluctant to forecast a rapid return to low grocery inflation. USDA now projects U.S. beef production at 25.288 billion pounds in 2026 and 25.200 billion pounds in 2027, both below 2025 output. The agency also forecasts the average slaughter-steer price rising from $251.10 per hundredweight in 2026 to $254.25 in 2027.
That supply picture argues for another year of elevated retail prices. The cattle herd is already at a 75-year low, and any meaningful herd rebuilding would initially tighten beef supplies further because ranchers would retain more heifers for breeding instead of sending them to feedlots. Drought is an important counterweight: poor pasture conditions can force more cows to slaughter and delay rebuilding, temporarily adding beef but prolonging the structural shortage.
The likely 2027 message is therefore continued beef inflation, but probably at a slower annual rate than in 2026. A higher comparison base, strong imports and consumer substitution toward pork and chicken can restrain retail increases. Still, wholesale and farm-level prices suggest beef is unlikely to become a source of outright food-price relief.
Eggs: from deflation to a base effect rebound
Eggs present the opposite forecasting challenge. USDA expects table-egg production to rise 4.4% in 2026 to 7.828 billion dozen and another 2.3% in 2027 to 8.010 billion dozen. The rebuilt laying flock and large inventory of replacement pullets explain why USDA currently forecasts retail egg prices to fall 30.4% in 2026.
Yet the wholesale price outlook already points to a modest rebound. USDA projects New York Grade A large eggs to average 96.8 cents per dozen in 2026 and 107.5 cents in 2027. Retail egg inflation could therefore swing back above zero next year even without another shortage. That would largely reflect the statistical comparison against depressed 2026 prices rather than a return to the extreme conditions seen in 2025.
HPAI remains the decisive risk. A large outbreak in a concentrated production region can remove millions of layers quickly, and egg prices respond faster than most food categories. USDA’s first 2027 egg forecast should be read primarily through the width of its prediction interval, not just the midpoint.
USDA Supply and Price Markers for Beef and Eggs
| USDA indicator | 2025 | 2026 | 2027 | 2027 vs. 2026 |
| Beef production, billion lb. | 26.003 | 25.288 | 25.200 | -0.3% |
| Slaughter-steer price, $/cwt. | $224.37 | $251.10 | $254.25 | +1.3% |
| Table-egg production, billion dozen | 7.497 | 7.828 | 8.010 | +2.3% |
| Wholesale large eggs, cents/dozen | 373.7 | 96.8 | 107.5 | +11.1% |
Source: USDA Economic Research Service, Livestock, Dairy, and Poultry Outlook, July 16, 2026. Wholesale egg prices are not retail prices but are an important upstream signal.
Why the broad forecast could still look benign
Several forces could keep USDA’s initial 2027 all-food forecast close to historical norms. Producer prices for final-demand foods fell 0.6% in June, and finished consumer-food prices declined 0.3%, indicating some easing upstream. The Energy Information Administration also expects lower average gasoline and diesel prices in 2027 than in 2026, which would reduce some farm, processing and distribution costs if the forecast is realized.
But disinflation is not the same as lower food prices. Even a 2% to 3% increase would come on top of the large cumulative gains since 2020. Consumers are also more exposed to categories they buy frequently, such as meat, eggs, coffee and restaurant meals, than to the statistical average of the entire food basket. That helps explain why public concern about food affordability can remain intense even when the overall inflation rate slows.
What to watch in Friday’s Report
1. The 2027 headline: Whether USDA starts all-food and food-at-home inflation near historical norms or builds in a larger risk premium.
2. The width of the ranges: Early next-year forecasts are inherently uncertain; unusually wide intervals for eggs, beef or vegetables would be as meaningful as the midpoint.
3. A 2026 beef revision: June retail beef inflation and continued strength in cattle prices could push USDA’s current-year forecast higher.
4. The egg turning point: A smaller 2026 decline or a positive 2027 forecast would confirm that the market has moved from collapse to stabilization.
5. Restaurant persistence: Food-away-from-home inflation is likely to remain above grocery inflation because service-sector costs adjust more slowly.
| BOTTOM LINEUSDA’s first 2027 forecast is likely to show moderate overall food inflation, but that headline will conceal two opposing protein stories: beef prices remain structurally supported by tight cattle supplies, while egg prices are likely to stabilize and then rebound modestly from a deeply depressed 2026 base. The initial forecast should be treated as a baseline for revision, not a precise prediction. |
