The grocery inflation rate is getting closer to normal. The grocery basket is not.

Food-at-home prices were 2.7% higher in June than a year earlier and rose 0.2% from May, according to the USDA’s July Food Price Outlook. The agency expects food purchased for home consumption to rise 2.7% across 2026, close to the long-run average of 2.6%, but well below the shock that reset shoppers’ reference prices.

That is the “rockets and feathers” problem described by The Associated Press in the Hartford Courant: prices rise quickly, then drift down slowly. Grocery prices jumped 11.4% in 2022, the sharpest annual increase in roughly 50 years, and the later slowdown has not reversed the level of prices consumers are paying. A lower rate of increase therefore feels like a reprieve in the data but not necessarily at the checkout.

The mix underneath the headline is also uneven. USDA data show June increases of 1.5% for fats and oils, 1.4% for beef and veal, 1.4% for other meats, 1.2% for dairy and 1.0% for sugar and sweets. Fresh vegetables fell 1.2%, while nonalcoholic beverages fell 1.5%, according to the same USDA category breakdown. For merchants, that spread matters more than the 2.7% average: shoppers experience categories, not an aggregate index.

Consumers are responding with behavior that can pressure both traffic and margin. The AP report says grocery item volumes declined in the second half of 2025 and fell more sharply beginning in February 2026, citing a Bain & Co. and NielsenIQ study. It also reports that Costco, Walmart and Aldi gained share from traditional grocers including Kroger and Albertsons in the second quarter. The competitive signal is not simply that shoppers want the lowest ticket; it is that they are willing to change stores, brands and basket composition to find a credible value.

Operators should plan around the price level, not wait for the inflation rate to deliver relief. That means keeping opening-price-point items visible, using category-specific promotions where costs are actually easing, and watching unit movement beside dollar sales. A broad promotional reset can give away margin in categories where costs remain elevated, while a narrow, well-signaled value offer can protect the trip and the basket.

The next test is whether the 2.7% forecast becomes a stable ceiling or another step in a compounding climb. For now, the consumer message is clear: slower inflation is not the same as lower prices.