Food-at-home price inflation could exceed 4% in 2026 as rising fuel prices from global conflicts spread across the US food supply chain, industry experts warned in a May 14 briefing by FMI, The Food Industry Association.
The April Consumer Price Index showed the pressure building. Food-at-home prices rose 0.7% month to month and 2.9% year over year, compared with a 0.2% monthly dip and a 1.9% annual gain in March. Total food prices (including dining out) climbed 0.5% monthly and 3.2% annually in April.
The Producer Price Index, which tracks costs further up the supply chain, showed an even sharper jump. April's PPI surged 1.4% month to month (double the March rise) and 6% year over year versus 4.3% in March. Food PPI specifically grew 2.2% annually in April after a 1.6% increase in March.
Fuel and Fertilizer Squeeze
Fuel and fertilizer costs are driving the pressure. Andy Harig, vice president of tax, trade, sustainability and policy development at FMI, noted that fuel is a critical input at every stage of food production, from farm equipment to transport. The Iran conflict and a blockade in the Strait of Hormuz have disrupted cargo shipments carrying energy and fertilizer, elevating ocean freight costs globally.
Fertilizer prices have "effectively doubled" for US farmers in some cases, said Ricky Volpe, professor of agribusiness at California Polytechnic State University. This hits row crop producers hardest (corn, wheat, soybeans, rice, barley), but the damage will take months to show up in grocery prices because higher fertilizer costs won't affect commodity prices until harvest, storage, and processing cycles occur.
When the Pain Hits
The April CPI data reflects only the "short-term impact" of heightened energy costs, Volpe said. Even if the Iran conflict resolved immediately, food price pressures would filter through the system into late summer and fall 2026. Higher fertilizer costs won't substantially affect grocery prices until months down the road, when they flow through harvest, storage, manufacturing, and distribution.
Other Pressure Points
Beyond fuel and fertilizer, tariffs, packaging, labor, weather, and pests are adding cost pressure. Across-the-board 10% tariffs on most foods remain in place. Volpe flagged foundational metals (steel and aluminum) as a particular concern: the US imports roughly half its supply from China and Canada, and international transport delays driven by the Iran conflict are driving up costs.
The US Department of Agriculture's Economic Research Service predicted food prices would rise 2.9% in 2026 overall, with food-at-home prices growing 2.4% for the year compared with a 20-year historical average of 2.6%. Volpe's own forecast was closer to 4% to 4.5% by year end as costs work through the system."