US Food Price Increases to Spread as Grain, Diesel Costs Soar

Food price increases in the US are expected to spread beyond high-end grocery items like beef and coffee as rising costs of grain, diesel, and fertilizer put pressure on farmers, food producers, and retailers.

Corn and wheat prices have reached their highest levels in over three years due to wars, higher energy costs, and weather-related disruptions affecting agricultural markets. Wheat is used in bread, pasta, and other staples, while corn serves as a major livestock feed, meaning sustained increases can eventually raise production costs for meat, dairy, eggs, and packaged foods.

According to the US Energy Information Administration, on-highway diesel averaged $5.652 a gallon in the week ending August 24, up from $5.134 on July 20. The Iran war has also put pressure on fertilizer markets due to disruptions at the Strait of Hormuz, an important route for agricultural inputs.

Wheat markets face supply concerns as Russia's war with Ukraine disrupts exports through the Black Sea, contributing to futures reaching a three-year high last week. Despite these pressures, consumers may not see the full effect immediately because changes in agricultural and transportation costs can take months to move through the food supply chain.

J.P. Morgan analysts project global food inflation could reach about 5% in the first half of 2027, up from roughly 2.8% in the first half of 2026, as crop disruptions and higher production costs continue affecting retail prices.