Why Is Food So Expensive?
While food inflation slowed in January, overall food prices are still up more than 34% since 2019.
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Updated · 3 min read
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Updated on Feb. 13.
After a sharp jump in December, prices for groceries and eating out grew at a slower pace in January. Food prices overall are up 2.9% since last January, according to the latest consumer price index (CPI), released Feb. 13.
Sweeping global tariffs affecting virtually all U.S. trade partners are now in effect. For details, see:
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 could further fuel inflation.
- 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.
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. Here are just a few examples of events that recently impacted food supplies and sent prices soaring.
The pandemic created a sudden surge in demand for groceries as lockdowns forced people to stay home. At the same time, food production slowed as COVID-19 spread and workplaces enacted new protocols meant to mitigate health risks to employees. You might remember items like yeast or meat became almost impossible to find. Prices for popular items soared as grocery stores and their suppliers struggled to keep up with consumers.
The war in Ukraine continues to affect that country’s food exports. As “the breadbasket of Europe,” Ukraine historically accounted for 9% of the global wheat market and 12% of the corn market, according to the USDA’s Foreign Agricultural Service.
A highly contagious and fatal bird flu first appeared in U.S. poultry at the start of 2022 and wreaked havoc on the national population of egg-laying hens through spring of 2025. Outbreaks have declined since then and egg prices are almost back to pre-pandemic levels.
Tariffs
After taking office in January, President Donald Trump began imposing tariffs that have the potential to usher in a new trade era. In many cases, these were applied on top of existing tariffs.
The bulk of them are now in effect, and range from 10% to 50%. Automobiles, steel and aluminum and some imports from Canada and Mexico have been hit with 25% tariffs. Certain goods that are included in the U.S.-Mexico-Canada Agreement (USMCA) are exempt.
A Yale Budget Lab analysis shows tariffs are likely to have a considerable initial impact on food prices. How prices are impacted long-term depends on how businesses and consumers shift their purchases in response to tariffs (or whether they can).
The analysis estimates overall food prices could be 2.6% higher in the short term and 3% higher after those substitutions take place. But products will be affected differently. For example, fresh produce prices could go up 5.4% in the short term before settling about 3.9% higher in the long term.
The U.S. imported roughly $216.1 billion worth of food in 2024, according to U.S. Census Bureau data. Those imports included:
- Fruit and fruit juices
- Fish and shellfish
- Bakery products
- Vegetables
- Meat products
- Wine, beer and other alcoholic beverages
- Food oils
- Unroasted coffee
- Dairy products and eggs
- Tea and other spices
- Nuts
- Sugar
- Cocoa beans
Some food prices could be heavily impacted because many imported items (like coffee beans, cocoa, and some fruits) can’t be sourced domestically; other items aren’t produced at enough scale to meet current U.S. demand.
Will food prices go down in 2026?
Food prices are continuing to rise, albeit more slowly.
In January, food prices were 2.9% higher compared to the previous year, according to the consumer price index report released Feb. 13 from 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 2.1% higher year-over-year in January. More on that below.
Restaurant prices were 4.0% higher year-over-year. Specifically:
- Full-service meals (at sit-down restaurants) cost 4.7% more year-over-year.
- Limited service meals (takeout only) cost 3.2% more compared to the same time last year.
How inflation is hitting your grocery bill
Grocery prices rose by a more moderate 0.2% month-over-month in January after jumping 0.7% in December. Prices actually dropped in some categories, like fresh fruits and vegetables, white bread and flour.
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, continued falling and are now down 34.2% from a year ago.
- Beef and veal prices fell 0.4%, pausing a record-breaking run. They’re still 15% higher than a year ago.
- Coffee prices fell 0.9% in January but are up a whopping 18.3% in the past year.
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.
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