U.S. food-at-home prices are projected to rise 2.7% this year, according to the U.S. Department of Agriculture. The projection follows a period where prices rose sharply after the pandemic and have declined slowly.

The 2.7% projection is close to the historical average of 2.6% but is higher than grocery inflation recorded in 2024 and 2025. The agency has historically played a key role in monitoring and forecasting food prices, with the Economic Research Service providing official projections on food price trends since at least 2000.

Food price inflation previously peaked in 2022. Retailers have shown reluctance to lower prices on inventory ordered when wholesale prices were high. Matt Hamory, leader of the global grocery practice at AlixPartners, addressed the disconnect between slowing inflation rates and consumer perception. He said the public is coming to grips with the idea that even though inflation has slowed, prices are not going down, and deflation is rare.

Consumer purchasing behavior has shifted in response to sustained higher costs. A study by Bain & Co. and NielsenIQ found that the number of items purchased at U.S. grocery stores declined in the second half of last year. The study found that grocery item purchases dropped more sharply starting in February of this year. The study cited high gas prices, rising GLP-1 usage, and cuts in government food aid as factors affecting grocery spending.

Shoppers have increasingly turned to alternative retailers and products. Discounters including Costco, Walmart, and Aldi took market share from traditional grocers like Kroger and Albertsons in the second quarter of this year. Total sales of store brands at supermarkets, drugstores, and other retailers reached $282.8 billion last year.

Sean Hooper, senior solution principal at Relex Solutions, commented on the appeal of these alternatives. He said that with lower prices, convenience, and trusted brands, there is little reason to return to more expensive options.

Retail egg prices reached record highs last year due to bird flu. The average price of coffee in U.S. cities has risen 54% since 2019. Coffee was subject to a tariff for most of 2025 before the duty was removed.

U.S. consumers paid more for fresh tomatoes in June compared to a year earlier. A 17% import tax on fresh tomatoes from Mexico was implemented by the Trump administration.

Major manufacturers and retailers have adjusted their pricing strategies in response to market conditions. PepsiCo increased prices by double-digit percentages for eight consecutive quarters in 2022 and 2023. PepsiCo began lowering prices on some snacks last year after customer demand faltered.

Walmart rolled back prices on ground beef, corn, red cherries, ice cream, potato chips, and Coca-Cola and Pepsi products in early July. Target cut prices on some foods in March.

Hamory indicated that retailer actions could influence broader market behavior. He said that if major retailers invest in lower prices to regain customer trust, others will be forced to follow. Jared Bernstein, senior policy fellow at the Stanford Institute for Economic Policy, noted the current competitive landscape. He said there is less competitive force on the feather side of the mountain.

The USDA projection indicates that grocery costs will remain elevated relative to recent years, continuing a trend that has reshaped consumer spending habits. The shift toward discounters and store brands reflects sustained pressure on household budgets, with total store brand sales reaching hundreds of billions of dollars. These changes suggest that price sensitivity remains a primary driver of retail dynamics, influencing how major chains and manufacturers set prices.