After years of volatility, food prices in the United States showed signs of stabilization during the first half of 2025. While the pace of inflation eased compared to the highs of 2022 and 2023, certain categories remained volatile. A combination of improved supply chains, weather patterns, policy developments, and global market shifts influenced pricing trends across the food and beverage industry.
Here’s a closer look at how food prices evolved from January to June 2025, which categories experienced the largest changes, what policy factors played a role, and what experts anticipate for the rest of the year.
A Softer Inflation Landscape
Food inflation moderated considerably in early 2025. According to the U.S. Bureau of Labor Statistics, grocery prices rose approximately 2.0% year-over-year by April. Restaurant prices increased by about 3.9% during the same period, slightly outpacing groceries but far below the inflation rates recorded in previous years.
Interestingly, some food categories even experienced deflation. The fruits and vegetables index declined by 0.5% compared to the same time in 2024. Meanwhile, overall consumer inflation was tracking around 2.3% to 2.4%, placing food prices in line with broader economic trends.
The Categories That Moved the Most
Among all food categories, eggs saw the most significant price increase—up over 40% year-over-year—driven by supply disruptions caused by avian influenza. Beef prices also rose sharply, with estimates ranging from 8% to 10%, largely due to smaller cattle herds resulting from past drought and feed cost pressures.
In contrast, lettuce and tomato prices dropped more than 6% thanks to improved growing conditions in California. Pork and dairy prices remained relatively flat, while coffee experienced a notable increase, with prices climbing nearly 10% due to tight global supply.
Grains, cereals, and bakery goods had a calmer pricing environment. Stabilized wheat and grain prices helped keep these items close to their long-term average, with minimal price movement overall.
What’s Behind These Changes?
Several factors influenced food price movements during this period:
- Supply shocks: The lingering effects of avian flu severely limited egg production, while beef prices were impacted by slow cattle herd recovery.
- Energy prices: Lower fuel costs, including diesel and gasoline, helped reduce transportation expenses for food distributors, slightly easing cost pressures across the board.
- Labor market dynamics: Persistent labor shortages and wage increases, especially in food processing and retail, pushed operational costs higher. These increases were passed on to consumers in many cases.
- Global commodity trends: Cocoa, coffee, and sugar prices remained elevated globally, contributing to increases in related food items in the U.S.
Key Policy Developments in Early 2025
Government actions also shaped pricing conditions in the first half of the year:
1. Trade Policy and Tariffs: A proposed set of new tariffs on imports from Canada, Mexico, and China threatened to raise food costs, particularly for imported produce and packaged goods. However, a temporary pause in implementation provided relief to grocers and distributors who feared widespread price hikes.
2. SNAP Funding Debate: Proposals in Congress to cut up to $300 billion in funding for the Supplemental Nutrition Assistance Program (SNAP) sparked strong opposition from the food industry. Grocers warned that cutting SNAP would hurt both vulnerable consumers and retail sales, as SNAP accounts for about 5% of total supermarket revenue. No final decision had been made by midyear.
3. Antitrust Enforcement: The Federal Trade Commission successfully blocked the proposed Kroger-Albertsons merger. Officials cited concerns about reduced competition and potential price increases. The failed deal underscored the government’s growing focus on keeping food markets competitive.
What to Expect in the Second Half of 2025
Forecasts from the USDA suggest a continuation of current trends. For the full year, food-at-home prices are expected to rise around 2.1%, while restaurant food inflation may hover around 4.0%. These projections assume no major disruptions in agriculture, labor, or global trade.
However, a few uncertainties remain:
- Weather-related crop risks from El Niño could affect grain, produce, or livestock feed costs.
- Beef and egg prices may remain elevated until herd and flock levels recover fully.
- SNAP and tariff decisions could change consumer behavior or introduce new supply-side pressures.
- Global commodity prices for sugar, coffee, and cocoa may remain volatile and affect specific product categories.
Despite these risks, most experts agree that the dramatic inflation of past years is behind us. A period of relative price stability appears to be taking hold, with food inflation returning closer to its long-term average.
