In July of 2026, grocery prices in the United States rose 2.7% over the previous twelve months — a normal year, the kind the country lived with for decades before the pandemic. And yet the receipt in your hand is still bigger than it has any right to be. The rate of grocery inflation has gone back to normal. The level has not. Since February of 2020, the price of the food you cook at home is up 31.8%.
A rate is how fast prices climb in a year. A level is where the price actually sits. In the twelve months ending August of 2022, grocery prices rose 13.5% — the steepest jump since 1979. A shock like that resets the level, and the level is the part that stays. Grocery inflation was 1.3% in 2023, 1.8% in 2024, 2.4% in 2025 — the rate came all the way down, but each of those small numbers still stacked on top of the one before it. In the last twenty-five years, the annual grocery index has fallen in exactly two of them.
Put trend against reality: before 2020, groceries climbed about 2.6% a year for two decades. Roll that forward and prices should be up 17.9% — they are up 31.8%, about 12% above where the long-run trend said they would be. For the average household, that overshoot works out to roughly $55 a month, paid for nothing new, and it does not expire.
Who settled at the higher level
In 2021, the FTC ordered nine large companies in the grocery chain — Walmart, Kroger, Amazon, and the suppliers behind them — to hand over internal cost and revenue data. The data did not support the industry's public claim that higher shelf prices were simply passing along higher costs. Grocery retailer revenue rose to 6% above total costs in 2021 (the prior peak was 5.6%, in 2015), then climbed to 7% by late 2023 — long after supply chains had healed. PepsiCo's 2023 filing told investors organic revenue rose 9.5% while volume sold went down: fewer items, more money, credited to "effective net pricing." None of this requires anyone to break a rule. A retailer widens its margin because shoppers kept paying.
Watch the full breakdown
This video works through the full arithmetic — the difference between a rate and a level, why shrinkflation is not the hole in the data people think it is, what eggs falling back down tells you about the rest of the cart, and who on the other side of the checkout kept the higher level in place. Watch it on YouTube: youtube.com/@TheCostOfLivingUS
Sources
U.S. Bureau of Labor Statistics, CPI "Food at home" (series CUUR0000SAF11) and "All items" (CUUR0000SA0) — data.bls.gov
U.S. Department of Agriculture, Economic Research Service, Food Price Outlook — ers.usda.gov/data-products/food-price-outlook
Federal Trade Commission, "Feeding America in a Time of Crisis" staff report, March 21, 2024 — ftc.gov
PepsiCo, Inc., Form 10-K for fiscal year ended December 30, 2023, filed with the SEC — sec.gov
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