U.S. consumers are facing rising grocery prices as surging diesel fuel and freight costs drive up expenses for food manufacturers, potentially triggering a new wave of food inflation. The trend comes amid broader inflationary pressures linked to energy and agricultural prices, and ahead of the upcoming midterm elections, where affordability has become a key political issue.

Companies across the packaged-food sector, including PepsiCo, Campbell’s, and Conagra, have signaled plans to increase prices in response to elevated input and transportation costs. PepsiCo CEO Ramon Laguarta highlighted the global nature of these inflationary pressures, noting that rising energy and agricultural prices are affecting markets worldwide. This year, PepsiCo had previously reduced prices on some products by up to 15 percent, but now anticipates upward price adjustments.

One significant factor contributing to cost increases is the record price of diesel fuel, which has pushed spot rates for long-haul truck trailers up approximately 50 percent compared to the prior year, according to freight marketplace data. In addition, prices for key inputs and packaging materials such as aluminum, corn, soybean oil, and urea fertilizer have risen sharply, often by double digits, according to banking analysts.

Food economist Ricky Volpe of California Polytechnic State University projects that food price inflation will accelerate gradually over the coming months, though not at the extreme rates seen in 2022 due to pandemic-related supply disruptions and geopolitical tensions. The U.S. Department of Agriculture similarly forecasts grocery prices to increase by around 2.4 percent this year.

The rise in grocery prices presents challenges for food companies aiming to boost sales volumes, especially as consumers face higher fuel costs and reduced food assistance, leading to more cautious spending. Additionally, the growing use of appetite-suppressing weight-loss drugs has also contributed to softer food demand.

Retailers are making efforts to mitigate price increases. Large chains like Walmart and Costco have directed substantial tariffs refunds toward lowering prices on select items. Kroger has pledged to align prices more closely with discount grocers and recently pulled Red Bull products over a pricing dispute. Aldi, a German discount grocery chain, is actively promoting deals with nearly a third of its everyday items priced below last year’s levels.

Market data presents a mixed picture. Consumer Edge’s food price index, drawing from Walmart, Target, and Meijer sales, has shown prices roughly 4 percent higher year-over-year, with renewed upward pressure observed recently. Meanwhile, analyses from research firm Numerator indicate a 0.7 percent price increase in September following two months of declines. The U.S. Bureau of Labor Statistics reported a 3.7 percent overall inflation rate last month.

Among manufacturers, Campbell’s has informed retailers of 4-5 percent price hikes covering 60 percent of its products, citing inflationary challenges despite cost-cutting efforts. Conagra is targeting inflation-driven price increases mainly in frozen foods. Lamb Weston, a major supplier of frozen potatoes to McDonald’s and retailers, indicated ongoing pricing actions aligned with rising input costs. McCormick projects 6-7 percent cost inflation for the year, increasing its earlier estimates.

Conversely, some companies are absorbing higher costs rather than passing them fully to consumers. Albertsons, a major supermarket group, emphasized a strategic focus on targeted price cuts to maintain competitiveness, with CEO Susan Morris acknowledging the difficult economic conditions facing many shoppers.

While grocery prices are generally rising, experts note that price increases are uneven across product categories and retailers, with some areas experiencing stable or lower prices. Overall, the combined effects of rising transportation, input costs, and consumer behavior suggest that food inflation will remain a significant concern for U.S. consumers in the near term.