Americans Are Eating at Home More

Americans are facing potentially higher inflation and softer economic outlook this year, as uncertainty over trade policy remains.

According to the US Department of Agriculture’s May 2025 forecast, food prices are expected to rise 2.9% this year, with food-at-home (grocery) prices to increase 2.1% and food-away-from-home (restaurant) prices to rise 4%.

Inflation is prompting more than 50 million consumers to shift or even freeze their spending should prices rise 10% or more, according to a recent study by PYMNTS, an analytical data platform. The study found that while consumers are reluctant to forgo dining out altogether, they have signaled a willingness to reduce the number of visits or turn to cheaper restaurants.

It’s cheaper to dine in than dine out

It's not surprising that consumers may choose to eat at home more as it may be cheaper to dine in than dine out. Goldman Sachs Research finds the gap between groceries and restaurant prices tracked at -1.9% in April (compared with -1.4% in March), as restaurant inflation rose faster than grocery inflation.

Food-at-home inflation decelerated in April to 2% from 2.4% in March (compared with the long-term average of 2.5%). This is driven by most food categories, with eggs being the biggest contributor.

That doesn’t mean your grocery bill won’t go up, however. For one, Goldman Sachs Research sees inflation is trending higher than last year’s average of 1.2%. Other leading indicators, including the GS Food Cost of Goods index, suggest food-at-home inflation will drift higher this year. However, Goldman Sachs Research does not believe there will be meaningful changes in consumer behavior on food spending until inflation exceeds 4%.

Grocers are raising prices for consumers

The Consumer Price Index (CPI) and Producer Price Index (PPI) spread widened to -4.8% in April (compared with -4.2% in March). This indicates that the cost of goods for grocers (as reflected by PPI) is increasing faster than the prices they can charge consumers (as reflected by CPI), which can lead to reduced profit margins for grocers.

The data echoes Goldman Sachs Research’s April 2025 supermarket survey findings, where a group of select grocers have overall increased prices slightly in April compared to March. In particular, frozen foods, premium food, and produce have all increased, but there have been declines in dairy and dry grocery.

Price gaps between different supermarket chains are widening as well, as grocers are still positioning their pricing strategies while facing uncertainty over how trade policy will impact costs.

Value-centric grocers, in particular, will be under greater pressure as they will be reluctant to raise prices as quickly as traditional grocers due to the nature of their business selling discount goods.

Preparing for inflation

It’s highly uncertain the impact trade policy will have on inflation this year, but being in an environment of rising prices can strain family finances. Now can be a good time to either start or revise your budgets if you haven’t already done so.

Planning ahead before your grocery trip can help save money. Here are several tips to consider:

• Make a grocery list and stick to it.
• Buy seasonal produce from domestic producers.
• Meal prep by buying in bulk.
• Compare prices across several grocers.
• Join store loyalty programs for perks and deals.