The U.S. Department of Agriculture’s latest forecast puts the year’s grocery bill on track to climb close to overall food inflation, though the headline number hides sharp swings underneath it. The Economic Research Service’s August 25 update, built on July’s Consumer Price Index and Producer Price Index data, projects all food prices rising 3.0% in 2026 and food-at-home prices, what shoppers pay at the register, up 2.5%, inside a range of 1.7% to 3.3%. Beef is forecast to climb nearly 10%, coffee is running hot inside a broader beverage category, and eggs are the rare grocery item getting cheaper.
USDA’s Latest Food Price Forecast, Explained
ERS updates its Food Price Outlook monthly, folding each month’s new Consumer Price Index and Producer Price Index data into its full-year projection. The version posted August 25 draws on July 2026 figures: the broad, economy-wide CPI held flat from June to July but ran 3.4% above a year earlier, while the CPI for all food climbed 3.0% over the same 12 months. Food bought for home consumption rose 2.7% year over year through July, a slower pace than the 3.4% increase recorded for meals eaten away from home.
That year-over-year snapshot differs from the full-year forecast, which averages observed and projected prices across all twelve months rather than comparing a single month with the year before. On that basis, the Economic Research Service projects food-at-home prices rising 2.5% for all of 2026, with a 95% forecast interval spanning 1.7% to 3.3%, a range wide enough that the final number could land close to 3% or well under it. All food combined, including restaurant meals, is forecast to rise 3.0%, and food away from home alone is projected up 3.6%, faster than its own 20-year historical average.
Grocery inflation had been cooling before this year’s acceleration. Food-at-home prices rose just 1.2% in 2024 and 2.3% in 2025, both below the category’s 20-year historical average of 2.6% a year, after the sharp run-up of 2022, when food-at-home prices jumped 11.4% amid an avian flu outbreak, the war in Ukraine and broad economy-wide inflation. The 2026 forecast of 2.5% would put grocery inflation back near its long-run average rather than repeating 2022’s spike, even as beef and coffee push select categories well above that trend line.
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Beef and Coffee Are Doing the Heavy Lifting
Beef and veal prices are the single largest driver behind this year’s grocery inflation. ERS forecasts beef and veal up 9.8% for 2026, with an interval of 7.0% to 12.6%, after wholesale beef prices climbed 7.8% year over year through July on federally inspected beef production that fell almost 5% that month. A multiyear contraction in the national cattle herd has left supplies historically tight, and USDA’s livestock economists expect production to keep running below year-ago levels through the second half of 2026, pointing toward continued pressure on beef rather than relief.
Coffee sits inside a separate line item, nonalcoholic beverages, that is also running above its long-run trend. ERS forecasts that category up 4.3% for 2026, faster than its 20-year average, after prices rose 0.7% from June to July and 4.1% over the trailing year, driven in large part by coffee and tea within the group. Two other categories are climbing even faster in percentage terms: sugar and sweets, forecast up 7.1% on higher candy and chocolate prices, and fresh vegetables, forecast up 5.9% after a volatile stretch of farm-level price swings. Beef and coffee draw the attention because shoppers buy them weekly and notice the difference at checkout, even where a category like sugar is technically rising faster.
Not every protein is moving in the same direction. Pork prices are forecast to rise just 0.8% in 2026, and poultry only 0.5%, both well below their historical averages, after each slipped slightly from June to July. For a household substituting chicken or pork for beef to manage a grocery budget, that gap is the difference between a rounding error and a nearly 10% hit, the kind of category-level detail a single 2.5% average cannot show.
Why Eggs Are Pulling the Average Down
Eggs are the exception working against the overall increase. After farm-level egg prices spiked 163% in 2022, 43% in 2024 and another 32% in 2025 as highly pathogenic avian influenza outbreaks devastated egg-laying flocks, ERS now forecasts retail egg prices falling 30.8% in 2026, with an interval of -35.3% to -25.3%. Retail egg prices were already down 25.7% year over year through July, and USDA expects total egg production to keep recovering as flocks rebuild and fewer new HPAI detections appear in 2026 than in the same months of 2025.
That decline is large enough to offset a meaningful share of beef’s increase in the blended food-at-home number, which is part of why the 2.5% grocery forecast sits below the 3.0% figure for all food combined. For a retiree budgeting a fixed monthly grocery allotment, the average understates what happens at the register if beef and coffee make up a larger share of the cart than eggs do, and understates the relief if the reverse is true.
The forecast itself is not final. It carries a 95% interval of 1.7% to 3.3% for food-at-home and will be revised again next month once August’s Consumer Price Index, due September 11, is folded into the model. ERS’s forecasting method narrows that range as more months of real data replace projected ones, which is why the 2026 estimate is far tighter than the agency’s early look at 2027, when food-at-home prices carry a forecast interval spanning -5.7% to 10.5%.
That widening range for next year is itself a reminder of how much a single forecast can move. The same forces splitting this year’s grocery bill, a cattle herd too small to meet demand, an egg flock still rebuilding from disease losses, and beverage costs tied to global coffee markets, are exactly the kind of supply shocks that could just as easily reverse or intensify by the time USDA publishes its next monthly update.
This article was researched and drafted with the assistance of artificial intelligence.
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