US grocery inflation persists post-pandemic

U.S. grocery prices remain elevated despite a slowdown in food price inflation, a pattern described as the 'rockets and feathers' effect. Food price inflation peaked at 11.4% in 2022 and has not reversed course. The U.S. Department of Agriculture projects food-at-home prices will rise 2.7% in 2026, above 2024-2025 levels but near the historical average. An acceleration in inflation after the U.S. and Israel attacked Iran has prolonged consumer frustration. Consumer behavior has shifted: discounters like Costco, Walmart, and Aldi gained market share from traditional grocers like Kroger and Albertsons in Q2 2026. Store brand sales reached a record $282.8 billion in 2025. Major retailers including Walmart and Target have begun price reductions on select items. Structural factors keeping prices high include retailer reluctance to lower prices on high-cost inventory, food companies maintaining profit margins, climate issues affecting coffee yields, and tariffs on tomatoes from Mexico. The war in Ukraine and bird flu also contributed to past price spikes.