ANNOUNCEMENT FOR PAID SUBSCRIBERS ONLY: Our next LIVE one-hour chat will take place on Tuesday August 11, 2026, at 11am Eastern.
Please reserve your spot today by sending me an email to confirm!
Tuesday’s CPI print, a fresh read on restaurant menus, a stressed growing season, and a war that refuses to stay resolved — put them side by side and they tell the same story. I want to walk you through all four, because no single data point captures what’s coming. Together, they do.
The June CPI, released Tuesday morning, will get reported as good news, and on the surface, it is: headline inflation fell 0.4% for the month, the biggest one-month drop since April 2020, pulling the year-over-year rate down to 3.5% from May’s 4.2%. But look at what drove that decline: it’s all about energy prices which fell 5.7% in June, more than offsetting increases everywhere else, including food. That’s a gasoline-price mirage, not a cooling economy, and it’s about to reverse.
Strip out the energy noise and the food story is unchanged from where it’s been all year: the food index rose 0.2% in June, with both food at home and food away from home also up 0.2%. Core inflation, that’s everything except food and energy, was flat for the month but still running 2.6% higher than a year ago, with shelter up 3.3%. None of that is about your shopper catching a break. It’s a shopper whose grocery and restaurant bills keep climbing while the one category that fell, energy, is the one most exposed to what’s happening 7,000 miles away in the Persian Gulf.
The broader USDA food inflation forecast backs this up: economists still expect all-food prices to rise 3.2% for 2026, with food at home up 2.7% year-over-year as of the most recent reading and food away from home running hotter, at 3.5%. Frankly, I think that is too conservative. Categories with the sharpest recent moves are poultry which is up 1.3% month over month, fish and seafood up 1.2%, sugar and sweets up 1.3% (and now running 7.1% higher than a year ago) these are the ones your shoppers will notice first in the cart.
Biggest movers in this week’s CPI report:
Eggs: up 4.3% month-over-month in June, the sharpest single-item move in the entire food index. Actual dollar price: $2.19 per dozen (latest published average, May 2026), still down sharply from the $3.78/dozen a year ago during the HPAI-driven spike — so despite June’s jump, eggs remain a rare “relief” item on a year-over-year basis.
Dairy and related products: up 1.2% month-over-month in June, the fastest-moving grocery category after eggs.
Fruits and vegetables: up 5.3% year-over-year, the single largest annual increase of any food-at-home group tracked.
Meats, poultry, fish, and eggs (combined group): up 0.6% month-over-month in June, up 2.6% year-over-year. Ground beef specifically: $6.75 per pound (May 2026), up from roughly $5.80/lb a year ago — about +16-19% year-over-year depending on the cut.
Other food at home: up 0.5% month-over-month in June, up 2.4% year-over-year.
Nonalcoholic beverages: up 2.9% year-over-year. Coffee is the driver: ground roast coffee averaged $9.72 per pound as of the latest published data, up roughly 29% year-over-year — though June’s monthly reading actually dipped, down 2.0% for the month.
Cereals and bakery products: up 0.3% month-over-month, up 2.4% year-over-year.
Food away from home: up 0.2% month-over-month in June, up 3.4% year-over-year, with full-service restaurant meals (+3.7% YoY) rising faster than limited-service/fast food (+3.1% YoY).
Note: BLS publishes the percentage index changes same-day with the CPI report, but the actual per-unit dollar prices (the “average price data” series) typically lag slightly, so the dollar figures above are the most recent published (May 2026).
Toast’s June Menu Price Monitor is the most granular read we have on what’s actually happening at the register in more than 170,000 U.S. restaurants. Toast tells a more nuanced story than the CPI headline, and it’s worth reading through the nuances.
Drip coffee: median $3.75, up 0.3% from May, up 7.1% year-over-year. This is the sharpest annual increase of anything Toast tracks
Cold brew: median $5.62, up 0.4% from May, up 3.7% year-over-year
Omelettes (newly added to the tracker, with data back to March 2023): median $15.00, down 0.1% from May, up 1.9% year-over-year
Hot dogs: median $7.66, up 0.8% from May, reversing three straight months of declines just as grilling season peaks and up 3.6% year-over-year
Burgers: median $14.71, down 0.1% from May, up 2.2% year-over-year
Chicken wings: median $13.91, down 0.1% from May, up 1.2% year-over-year
Burritos: median $13.58, down 0.1% from May, up 1.6% year-over-year
Beer: median $6.60, flat from May, up 2.2% year-over-year
At first glance June looks almost calm as five of the eight tracked items actually eased slightly month over month. But look at what’s driving the two categories that didn’t: coffee and hot dogs, both up, and both for reasons that map directly onto The Lempert Report’s other three signals. Coffee’s 7.1% year-over-year run is a climate story as I’ve been ringing the warning (or should I say ‘warming’) bell for years. Toast points to drought and flooding pressure in the “bean belt,” and notes that even when global coffee futures dip on favorable crop forecasts, those savings haven’t reached the operator level because shipping and labor costs are eating the difference. Hot dogs breaking a three-month losing streak right as grilling season hits its peak is a meat-cost story, and it’s the same tight-cattle-herd dynamic showing up in burgers, which despite a flat June are still up 2.2% for the year on beef prices that remain historically elevated.
The flat-to-down month for burgers, wings, and burritos isn’t good news so much as a pause. Operators absorbed a beef cost spike over the past year without fully passing it through to shoppers. That’s margin compression, not relief and that gap doesn’t close itself. With cattle herds still contracting and wholesale beef up nearly 16% year-over-year per USDA data, June’s calm on the beef-and-poultry side of the menu looks more like the quiet before the next round of increases than the start of a cooling trend.
This is the fifth force I keep coming back to: weather and disease sit alongside tariffs, labor, energy, and geopolitics as a driver of food inflation, and this summer is reminding us why. USDA’s Agricultural Weather Highlights from the past two weeks paint a genuinely mixed picture, and mixed is not the same as fine.
The good news: as of July 5, corn and soybeans were tracking ahead of average development, with 67% of corn and 64% of soybeans rated good to excellent, and the Corn Belt itself has seen mostly favorable moisture. If that holds through pollination which is the most yield-sensitive window of the season, we could see a good solid harvest.
The bad news is everywhere else. Winter wheat closed the season with 47% of the crop rated very poor to poor. The Northern Plains are heading into what USDA itself calls a “significant and dangerous heat wave,” with barley and spring wheat — 60% headed and 54% headed, respectively, as of early July — increasingly exposed to that heat at a vulnerable growth stage. Western states are seeing topsoil moisture more than 35% short across the board, with wildfire risk elevated from eastern Washington to the Desert Southwest. And nationally, as of the most recent Drought Monitor, 67% of the country is abnormally dry or in drought, with 46% of the U.S. cattle herd, which I already shared is already historically small, sitting in drought conditions.
Agricultural meteorologists are now projecting corn yields could slip 5-6% off current good-to-excellent ratings if the dry stretch persists through pollination. That’s the kind of number that moves commodity markets fast — and it doesn’t stop at the ethanol plant or the export terminal. Corn is also the backbone of cattle feed, and the same drought stress hitting the Northern Plains is thinning hay yields at the same time, squeezing the two feed sources ranchers lean on most. That one-two punch lands directly on top of a cattle herd that’s already too small to meet demand, giving ranchers even less room to rebuild it.
And then there’s Iran. This is the variable I think most shoppers and honestly, most retailers, are underestimating right now, because the news cycle keeps treating the ceasefire as the end of the story. It isn’t.
After a memorandum of understanding brought a temporary calm in June and briefly pushed Brent crude back toward pre-war levels, fighting resumed in the Strait of Hormuz this month. The U.S. struck Iran again over the weekend after Iranian forces attacked commercial vessels in the strait; Brent crude jumped more than 4% in response, trading near $79 a barrel as of this week and that’s about 9% above pre-war levels and climbing. Maritime traffic through the strait, which carried 130 vessels a day before the war, has collapsed to single digits on some days this month.
Why does this matter for your shoppers’ grocery bill specifically, and not just their gas tanks? Because the Strait of Hormuz isn’t just an oil chokepoint, it’s a fertilizer chokepoint. Gulf countries account for roughly 30-35% of global urea exports and 20-30% of ammonia exports, and up to 30% of all internationally traded fertilizer normally transits that strait. Sulfur, a key fertilizer input, is also concentrated there. The Gulf produces roughly 45% of the global supply. Analysts at Morningstar have projected nitrogen fertilizer prices could roughly double from 2024 levels if the disruption persists, with phosphate up around 50%. Brazil, which supplies nearly 60% of global soybean exports, gets almost half its fertilizer through that same strait. India, a top five rice exporter, sources more than 40% of its urea and phosphate from the region and has already had to curtail production at three domestic urea plants.
This is the fifth force compounding on itself: a war that spikes energy costs directly, while simultaneously starving the world’s farmers of the fertilizer they need to grow the crops that are already stressed by heat and drought. It’s not two separate problems. It’s one supply chain getting squeezed from both ends at once.
Here’s the framework I keep returning to: we are in a Polycrisis Shopper environment, and this week is a case study in why. The CPI’s “good news” headline is a temporary energy-price illusion sitting on top of a war that just reignited. Restaurant menu data looks calm on the surface this month, but that calm is operators absorbing beef and poultry costs they haven’t fully passed through yet, and that point to more menu price hikes are coming, not fewer. The growing season has a real chance of a strong corn and soybean harvest, but only if the next few weeks of pollination-window weather cooperate, and wheat, barley, and cattle are already taking the hit. And fertilizer, the input no shopper sees on a shelf tag but that’s baked into the cost of nearly everything in the center of the store, is exposed to a shipping lane that’s now seeing missile attacks on a daily basis.
None of these forces is decisive on its own. Together, they point the same direction: higher prices, both at the supermarket checkout and on the menu, through the back half of 2026. The K-shaped divide will keep widening as it does; higher-income shoppers absorb this the way they always do, while everyone else does more backwards shopping, trading down, and stretching further to make the same dollar work. Retailers and operators who get ahead of this with clear, honest value communication and not just price increases dressed up in smaller portions, will be the ones who hold onto trust when this cycle finally breaks.
It hasn’t broken yet.
Thanks for reading The Lempert Report!
Comments
Nothing yet. Say the first thing.
Sign in to join the conversation.