Why Grocery Prices Haven't Fallen Yet: What You Need to Know About Inflation in 2025

When will grocery prices go down? It’s the question on every shopper’s mind, especially after promises made during the 2024 campaign. As of mid-2025, the answer remains frustratingly unclear. Food prices have climbed 2.9% over the past 12 months through July 2025, outpacing the broader inflation rate of 2.7% across all categories. This means your grocery bill is getting heavier faster than overall price increases—a sharp contrast to energy costs, which have actually dropped 1.6% year-over-year.

The Tariff Effect: The Primary Culprit Behind Rising Food Costs

Understanding when will grocery prices go down requires examining tariffs, which have emerged as the dominant force inflating food expenses. The Tax Foundation projects that nearly 75% of all U.S. food imports will face tariff pressures. Major retailers like Walmart and Whole Foods have been forced to adjust their pricing upward in response.

Why can’t massive retailers like Walmart—which posted over $7 billion in consolidated net income in Q2 FY26—simply absorb these costs? The answer lies in thin profit margins. Retailers typically operate on a 2.5% to 4% net profit margin per quarter. When input costs rise 10% due to tariffs, absorbing that difference isn’t financially viable. They must pass the burden to consumers to maintain profitability.

If tariff policies persist or intensify, expect food price relief to remain elusive throughout 2025 and beyond. Prices would only normalize if tariffs were negotiated down or domestic food production expanded enough to rebalance supply-and-demand dynamics.

The Meat Counter Problem: Beef and Veal Leading the Charge

Some consumers feel inflation more acutely than others—particularly those who purchase beef. The U.S. Department of Agriculture (USDA) reported that beef and veal prices rose for seven consecutive months from June through July 2025. Month-over-month increases hit 2.5%, with year-over-year gains reaching 11.3%. The USDA’s 2025 outlook projects another 9.9% climb before year-end.

Tight supply conditions in livestock markets are compounding the tariff problem. Beyond beef, the USDA flagged eggs, sugar, sweets, and nonalcoholic beverages as categories heading for above-average price growth. Shoppers seeking relief should focus on other meats, fats, oils, and fresh vegetables—the few categories expected to see actual price declines.

Restaurant Pricing: Inflation Hits Dining Out Harder

The gap between grocery shopping and eating out has widened significantly. Monthly data shows supermarket food prices increased 0.1% month-over-month, while restaurant prices surged 0.3% in the same period. On an annual basis, the picture is even starker: groceries are up 2.2% year-over-year versus 3.9% for restaurant meals and food services.

Looking ahead to 2026, the divergence will likely continue. Grocery inflation is forecast at 1.2% annually, while dining expenses are projected to rise 3.3%. This suggests that preparing meals at home will increasingly offer value advantages over restaurant consumption, but overall food inflation remains stubbornly persistent.

When Will Prices Finally Decline? Realistic Outlook

The central question—when will grocery prices go down?—doesn’t have a near-term answer. Tariff policies show no signs of reversal, supply-chain constraints in meat production persist, and the USDA’s 2026 projections paint a picture of sustained food cost increases. Energy prices have proven responsive to policy changes (down 1.6%), demonstrating that some sectors can move faster than others.

Food inflation appears structural rather than cyclical at this moment. While future tariff negotiations or expanded domestic production could provide relief, current trajectories suggest consumers should budget for elevated grocery expenses well into 2026. Shopping strategically around categories with projected price declines—and cooking at home more often—may offer the most practical near-term relief.