Why Is Food So Expensive?

Food inflation continues at well above the 2% annual rate targeted by the Federal Reserve.

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Edited by other Updated Jul 14, 2026 Why Is Everything So Expensive? U.S. Inflation Drops to 3.5% as Energy Costs Fall Will Prices Ever Go Down? For Some Things, They Already Have Updated on July 14. Updated on July 14. Inflation on groceries climbed modestly in June, matching May’s monthly inflation rate of 0.2%. Food prices overall are up 3.0% since last June, according to the latest consumer price index (CPI), released July 14 by the Bureau of Labor Statistics. Beef and veal prices climbed 1.2% after falling slightly in May (and are up 11.8% over the last year). Some food categories rose in price while others dropped. Lettuce prices, for example, climbed 6.5% in June while tomato prices fell 10.0% in the same month. Prices for “food at home,” a category that encompasses grocery purchases, edged up 0.2% in June, as did “food away from home,” which includes full-service and fast-food restaurants. 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. » MORE: How is the economy doing? » MORE:

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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. » MORE: What does the U.S. manufacture and how does it impact the economy? » MORE: 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 pandemic 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. The war in Ukraine 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. A highly contagious and fatal bird flu

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 in June at the same monthly rate as in May. In June, food prices overall were 3.0% higher compared to the previous year, according to the consumer price index report released July 14 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 3.4% higher year-over-year in June. More on that below. Grocery prices Restaurant prices were 3.5% higher year-over-year. Specifically: Restaurant prices Full-service meals (at sit-down restaurants) cost 3.7% more year-over-year. Limited service meals (fast food and takeout) cost 3.1% more compared to last June.

How inflation is hitting your grocery bill

Grocery prices rose 0.2% month-over-month in June, matching May’s monthly rate. Prices actually dropped in some categories, like flour and bacon, while rising in others. 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: What this means: Egg prices, which spiked in late 2024 and early 2025 due to avian flu outbreaks, are now down 27.9% from a year ago — but rose 4.3% in June, on top of a 4.0% rise in May. Beef and veal prices rose 1.2% after falling 1.6% in May. They’re 11.8% higher than a year ago. Coffee prices fell 2.0% in June but remain up 12.9% over the past year. Tomatoes fell 10.0% in June but are up 19.5% in the past year. Lettuce prices climbed 6.5% in June and are up 32.1% for the 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. The Bureau of Labor Statistics tracks the CPI 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 Bureau of Economic Analysis measures the personal consumption expenditures price index. 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. The U.S. Department of Agriculture measures the cost of different food plans. Explore more on About the author Phaneuf Taryn Phaneuf is a lead writer & content strategist covering wealth management, financial planning and other investing topics at NerdWallet. She previously reported on personal finance news. Prior to joining NerdWallet, she spent more than a decade covering education, public policy and business for various news outlets. She also taught journalism as an adjunct instructor at her alma mater, the University of Minnesota. She lives in Minnesota. Published in Egg Producers Manipulated Prices, DOJ Says By Taryn Phaneuf Trump’s Tariffs Begin: Here’s What Could Get More Expensive By Taryn Phaneuf Austin Is Booming. So Why Are Rents Falling? By Taryn Phaneuf Can Trump Lower Gas Prices as President? By Taryn Phaneuf Why Is My Car Insurance So High? By Kayda Norman, Ryan Brady, CFP® Travel Inflation Report: July 2026 By Sally French, Benjamin Din Are Car Prices Going Up or Down? By Shannon Bradley How to Shop Amid Tariff Uncertainty By Kimberly Palmer Southwest Ditches Free Bags, Adds Basic Fares By Craig Joseph