Market News

(Bloomberg) -- As Americans confront a surge in prices at the pump, another inflation wave is headed for the grocery store.

A combination of factors including bad weather, tariffs and a dwindling cattle herd are already pushing up grocery prices at an above-average pace. In April, they rose by the most in nearly four years, and economists say the impact of the Iran war and a potential El Niño weather pattern will only add to pressures into 2027.

The hit to US household finances from higher grocery bills is set to intensify just ahead of the November midterm elections, amplifying affordability as a defining issue. And to a greater extent than the surge in gas prices, the slower-moving food shock will be difficult to reverse quickly because the size of autumn harvests is determined by planting decisions made in the spring.

“It’s going to be a challenging year,” said Ricky Volpe, an agribusiness professor at California Polytechnic State University who previously worked at the US Department of Agriculture’s Economic Research Service. “Food is going to become less affordable, and consumers should be prepared for it.”

The latest USDA food price outlook, published Friday, projected a 3.2% advance in grocery prices this year, while Volpe said he expects inflation more on the order of 4% to 4.5%.

James Giese of Madison, Wisconsin said he lives on his own but is making adjustments with rising grocery prices like cutting back on prepared foods and meat. Giese, 62, is even trying to grow potatoes in his backyard to supplement his food budget.

“I’m very concerned,” he said. “I’m probably considered middle-income, but it’s starting to pinch.”

Outsize price increases so far in 2026 have reflected a mix of bad luck, trade policy and slower-moving pressures linked to climate change. The weather in particular has not been kind to American farmers, who have endured outbursts of record-breaking heat, historic cold, ping-pong size hail and wildfires.

The US saw its warmest-ever start to the year, with temperatures running about 6F (3C) above average through the end of April, according to the National Centers for Environmental Information. The early heat prompted some domestic crops to begin blossoming weeks ahead of schedule instead of remaining dormant throughout the winter, leaving them exposed to subsequent frosts, according to Brad Rippey, a USDA meteorologist.