U.S. food prices are expected to continue rising in 2026, but at a more moderate pace than in recent years, according to the updated Food Price Outlook released by the U.S. Department of Agriculture’s Economic Research Service (USDA ERS). The January 2026 update, which differs somewhat from earlier forecasts, projects that overall food prices will increase about 3% this year, a figure that incorporates expected trends across both grocery and foodservice channels.
The ERS forecast suggests a continued cooling of grocery (food-at-home) inflation, with price growth likely to fall below historical averages. Other sources reporting on the USDA outlook indicate that food-at-home prices may rise in the range of 1.7% to 2.3% in 2026, depending on methodology, as compared with 2.3% to 2.4% in 2025.
The projected moderation comes after several years of above-average increases in retail food costs, driven in part by pandemic-era supply disruptions, elevated commodity prices, and broader inflationary pressures.
While grocery inflation is slowing, the Food Price Outlook and related analysis point to significant variability across key categories, with some food sectors contributing disproportionately to overall price growth.
Food Inflation Will Impact Categories Differently
Among food-at-home categories, beef and veal are forecast to experience the largest price increases in 2026, with USDA data suggesting beef prices could rise by 9.4% or more as tight cattle inventories and strong domestic demand continue to put upward pressure on retail prices.
In contrast, prices for eggs are forecast to decline sharply, potentially dropping more than 20%, as the avian flu crisis eases and production rebounds following recent disruptions to poultry markets. Other proteins such as pork and poultry are expected to see more modest changes or slight declines, providing some offset within the broader food-at-home index.
Produce and beverage categories are expected to show mixed performance. Fresh vegetable prices may rise moderately, while fruit price growth is expected to be much smaller. Some segments of nonalcoholic beverages, particularly those linked to global commodity markets like sugar and coffee, could continue to outpace average inflation.
Grocery and Restaurant Price Trends Diverge
The developing split between grocery and restaurant inflation remains notable. USDA’s outlook and related reports highlight that restaurant (food-away-from-home) prices are likely to rise at a faster clip – potentially above 4% in 2026 – as labor and service costs continue to exert upward pressure on aggregate foodservice pricing. This pattern mirrors observed trends in recent CPI data, where dining-out costs have historically climbed more quickly than grocery prices due to operational cost structures that retailers and restaurants face.
USDA’s forecasts are presented with prediction intervals that reflect uncertainty in economic conditions, supply chains, weather, trade policies and other structural drivers. While the central tendency points to moderate inflation, the range of possible outcomes highlights the potential for volatility in specific categories or during economic disruptions.
For grocery retailers and CPG manufacturers, the 2026 outlook heralds a nuanced environment: broad relief in headline food price inflation paired with “sticky” category-level risk. Beef and nonalcoholic beverages may require more tactical price and promotion management, while softer segments like eggs and select proteins could provide temporary cost relief for consumers and operational flexibility for supply chains.
