Center for Agriculture and the Economy
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Grocery Prices Are Inching Higher from Supply Conditions in Meat and Processed Foods Sectors
June 1, 2026
By Francisco Scott
Food prices have increased at a faster pace in 2026 than in 2025, but at a slower pace than the peaks of the last five years (Chart 1). Inflation in prices for food consumed at home (i.e., food-at-home inflation) peaked in 2022 at an average yearly rate of 11.7%, driven by increases in the prices of meat and processed food, but eased to an average of 2.2% in 2025. Higher meat and processed food prices have again driven most of the food-at-home inflation in 2026, which registered a 2.8% increase in prices this April compared to the same period last year.
Changes in supply conditions have explained most of the increase in prices for food at home in 2026. Unlike the post-pandemic period, when strong consumer demand explained a sizable portion of US food-at-home inflation, increasing pressures on the food supply chain have explained most of the current variation in food prices (Chart 2). Evolving cost pressures in the processing, wholesale, retail, and transportation sectors, together with constrained supply of cattle herd liquidation and the slow pace of herd rebuilding in recent years, have increased the contribution of sectors with more complex supply chains, such as meat and processed foods, to inflation. As discussed in Cowley and Scott (2022), these supply factors tend to have a large effect on food prices.
Overall, supply conditions affecting meat and processed foods have contributed the most to increases in food-at-home prices. Without changes in demand for these types of foods, easing supply pressures may help soften the increases in food-at-home prices.
Chart 1: Contribution of Food Categories to Food-At-Home Inflation
Note: Processed food includes cereal and baked goods, cheese, ice cream, other dairy products, processed fruit and vegetables, beverages, and the category of other food at home. Fresh and lightly processed food includes eggs, milk, and fresh produce. Meats includes all meat products.
Sources: Bureau of Economic Analysis, and author’s calculations
Chart 2: Contribution of Supply and Demand Conditions to Food-At-Home Inflation
Notes: We use the following aggregate categories from the PCE to decompose food inflation into demand and supply shocks: cereal and bakery, meat and poultry, fish and seafood, milk, dairy and eggs, fats and oil, fresh fruits and vegetables, processed fruits and vegetables, sugar and sweets, other food products, and nonalcoholic beverages. The full decomposition methodology can be found in Shapiro (2026).
References: Shapiro, Adam Hale. "Decomposing Supply‐and Demand‐Driven Inflation." Journal of Money, Credit and Banking 58, no. 2 (2026): 365-388.
Cowley, Cortney, and Francisco Scott. "Commodity Prices Have Limited Influence on US Food Inflation." Federal Reserve Bank of Kansas City, Economic Bulletin, September 23 (2022).
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