USDA Forecasts: Food Prices Still Expected to Climb in 2026—Budget Takeaways

USDA’s Economic Research Service (ERS) updated its Food Price Outlook on July 24, 2026. For household budgets, the practical takeaway is simple: USDA expects food prices to rise again in 2026 and to stay under pressure into 2027, with a bigger squeeze often showing up at restaurants and other food-away-from-home purchases.

What the update is (and isn’t)

USDA’s outlook is built to forecast annual food-price growth—not to predict whether your next grocery trip will be higher or lower line by line. ERS also reports prediction intervals, which means the forecast is probabilistic (not a promise that prices will rise every month).

Where food prices stood in June 2026 (CPI baseline)

Using June 2026 CPI as a baseline, the latest reading shows food pressure continuing on both major household “buckets”:

• Food (all items): +0.2% from May to June
• Food at home (groceries): +0.2% from May to June
• Food away from home: +0.2% from May to June

On a 12-month view through June 2026, the two buckets were:

• Food at home: +2.7%
• Food away from home: +3.4%

USDA’s forecast for 2026: the “groceries vs. dining out” split

For 2026, USDA ERS forecasts annual increases as follows:

• All food: +3.1% (prediction interval 2.3% to 3.8%)
• Food at home: +2.7% (prediction interval 1.6% to 3.9%)
• Food away from home: +3.5% (prediction interval 3.0% to 3.9%)

Budget implication: in this outlook, dining out/foodservice is expected to run hotter than groceries in 2026.

USDA’s outlook for 2027: upside pressure, wider uncertainty

For 2027, USDA projects additional annual increases, but with a wider range of possible outcomes:

• All food: +3.1% (prediction interval -2.9% to 9.3%)
• Food at home: +2.9% (prediction interval -5.6% to 12.3%)
• Food away from home: +2.1% (prediction interval -0.9% to 5.1%)

That uncertainty matters: the forecast reflects USDA’s modeling across observed and expected monthly movements, not a single-month “CPI will be X” storyline.

Which parts of food spending may keep pushing totals

Even when some categories cool, others can keep the overall total elevated. In the recent month-to-month movement highlighted by USDA ERS, several food-at-home categories rose from May to June 2026 (including fats and oils, beef/veal, dairy, and sugar & sweets), while fresh vegetables fell.

For shoppers, this is why “one purchase category” can look fine while the total grocery bill still feels tight.

What to do with this information at checkout

• Budget for more pressure in 2026. USDA’s annual outlook suggests food costs remain on an upward track, not a quick reset.
• Watch your food-away-from-home line item. If you’re trying to manage a tight budget, the outlook’s structure puts dining out at the center of the squeeze.
• Use receipts to sanity-check your household mix. If your grocery total is tracking closer to food-at-home inflation, USDA’s outlook supports expecting modest-to-moderate pressure rather than runaway changes.

The Federal Reserve’s monetary policy materials also underscore that food inflation can be sensitive to broader cost pressures (including trade and commodity-price dynamics). So the “what to watch next” is straightforward: future CPI/PPI updates and the next ERS outlook refresh will be the clearest signal of whether the grocery vs. dining-out gap narrows—or widens.

Sources

• USDA ERS Food Price Outlook summary (updated 7/24/2026)
• BLS CPI (June 2026) news release
• Federal Reserve Monetary Policy Report (July 2026), Part 1

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