Updated on Sept. 11.
Inflation on groceries climbed modestly in August after falling in July, rising 0.1%. Food prices overall are up 2.7% since last August, according to the latest consumer price index (CPI), released Sept. 11 by the Bureau of Labor Statistics.
Beef and veal prices fell 1.0% in August after falling 0.8% in July (they remain up 5.9% over the last year). Some produce rose in price while some dropped. Potatoes rose 1.2% for the month and oranges rose 1.0%, while lettuce prices fell another 6.2% after plunged 16.4% in July in the wake of a widely publicized cyclospora outbreak.
Prices for “food at home,” a category that encompasses grocery purchases, were unchanged in August, while “food away from home,” which includes full-service and fast-food restaurants, rose 0.3%.
No single factor can explain why food is so much more expensive now than before the pandemic. Food prices — which are up 34.6% since 2019 — remain high because of the combined impact of rising input costs, supply chain disruptions and corporate profits. Higher tariffs currently in effect on some imported food are an additional factor.
- Higher production, labor and fuel costs have rippled through every aspect of the food system.
- Supply chain disruptions caused by global events, severe weather and disease have affected many essential crops and livestock.
- Some food companies that sought to maintain — or increase — profitability while facing these volatile conditions.
- Tariffs enacted by the Trump administration have affected prices on many food items long supplied by foreign trade partners.
The Iran war is also a factor, spiking not only fuel costs but also affecting the global shipment of fertilizers.
Some of these factors affect food production across the board while others affect only some products. Here’s a deeper look at why food prices are high.
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Operating costs
From farm to supermarket, everyone has people to pay, equipment or raw materials to buy and vehicles to fuel. And those operating costs have become more expensive over the past few years. That adds to the cost of the food you purchase at the store in more than one way.
One example: Beef. Years of drought, high grain prices and rising interest rates made cattle farming so expensive that many U.S. farmers reduced the size of their herds to cut costs — and some got out of the business altogether. Now, the U.S. cattle inventory is the smallest it’s been since 1951. That huge drop in supply has pushed prices for ground beef and sirloin steak to all-time highs.
Supply-chain disruptions
Sudden, sometimes unavoidable events can create supply shocks that drive up food prices. The sources and intensity of those supply shocks vary. Examples include the pandemic that began in 2020 and the ongoing wars in Ukraine and Iran.
Tariffs
After taking office last year, President Donald Trump began imposing tariffs that have ushered in a new trade era.
These not only affect some imported food prices directly, but can also result in indirect pressures. For instance, steel tariffs have made the manufacture of tin cans more expensive.
What’s happening to food prices in 2026?
Food prices rose 0.4% in August after a 0.1% monthly rise in July.
August food prices overall were 2.7% higher compared to the previous year, according to the consumer price index report released Sept. 11 by the Bureau of Labor Statistics. The CPI, which serves as a proxy for inflation, measures changes in average costs of items in a given period. Food prices include food at home (groceries) and restaurant purchases.
Grocery prices were 2.2% higher year-over-year in August. More on that below.
Restaurant prices were 3.4% higher year-over-year. Specifically:
- Full-service meals (at sit-down restaurants) cost 3.5% more year-over-year.
- Limited service meals (fast food and takeout) cost 3.2% more compared to last August.
Since March 2020, overall food prices have risen 33.4%, while average hourly earnings over the same period have risen 31.9%.
How inflation is hitting your grocery bill
Grocery prices overall were flat in August, but that masks a fair bit of turbulence at the category level. In July, for instance, the cost of flour fell but cakes and cupcakes rose; in August, flour rose but cakes fell.
What this means: It’s a good reminder that food prices don’t move uniformly, and overall inflation tends to be driven by price volatility in a few categories. For example:
- Egg prices, which spiked in late 2024 and early 2025 due to avian flu outbreaks, are now down 23.0% from a year ago — but rose 2.9% in August.
- Beef and veal prices fell 1.0% in August and 0.8% in July. That’s still 5.9% higher than a year ago.
How are food prices tracked?
Food prices are tracked by several federal agencies, including the Bureau of Labor Statistics and the Bureau of Economic analysis.
The Bureau of Labor Statistics tracks the CPI, which measures the change in average price that consumers pay for goods and services, including food. So the CPI is also a measure of inflation.
In the CPI, the cost of food is of high relative importance to the overall index, compared to the other tracked goods and services. Food costs make up 13.4% of the index, to be exact. Its importance is second only to shelter (34.73%). But food prices, like energy, also tend to be more volatile, and for that reason it is usually left out of the “core inflation” version of the index.
The Bureau of Economic Analysis measures the personal consumption expenditures price index. The PCE tracks how much consumers spend on goods and services, as well as how consumers change spending habits in response to price shifts. Food is considered a non-durable good in its analysis. Core PCE — the Federal Reserve’s preferred measure of inflation — also excludes food and energy.
The U.S. Department of Agriculture measures the cost of different food plans. These plans are adjusted each month, based on CPI data and average family income levels: thrifty or low, moderate and liberal. The Thrifty Food Plan is the basis for the Supplemental Nutrition Assistance Program, or SNAP.
