(Bloomberg) — Even as U.S. inflation has eased from its pandemic-era peak, prices at grocery store meat counters are soaring with no sign of relief.
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Beef costs are rising faster than most other commodities in the Consumer Price Index, with the beef and veal category up 15% in the past year through January. Government data released on Friday showed raw ground beef prices soared to their highest level since June 2020, setting a new record.
These gains are striking compared with the general improvement in the rest of consumers’ grocery baskets. Chicken prices have risen just 1.1% over the past 12 months, while milk prices have changed little.
The blame game behind soaring beef prices forces a response from the White House. U.S. President Donald Trump has vowed to increase competition in beef processing and raise import quotas for Argentine beef to ease supplies.
But it’s not that simple: The U.S. cattle herd has shrunk to its lowest level since the early 1950s in recent years due to drought and higher production costs, including rising interest rates, making it more expensive to raise livestock.
Photographer: Angus Mordant/Bloomberg
While the cattle industry is cyclical, the current contraction is lasting longer than expected because there is more money to be made by slaughtering young animals when they are sold than by raising them to expand herds.
Don Close, senior animal protein analyst at Terrain Ag, said that at current levels, any expansion of the U.S. cattle herd would hit retail counters as early as 2028, keeping beef prices elevated for longer.
The ongoing cattle shortage is a boon to ranchers, especially so-called cow-calf producers at the beginning of the supply chain, who sell their young animals to other ranchers. “In my opinion, raising calves should be profitable right now,” said Kansas rancher Brandi Buzzard. But even they think their situation is precarious. Kacie Scherler, a fifth-generation rancher in Oklahoma, said she is being squeezed by an inflationary environment, with costs for equipment, maintenance and land rentals all soaring.
“It actually feels very vulnerable,” said Scherer, who runs a 5,000-acre dairy and calf operation with her husband, Zach Abney. “So while cattle are worth more than ever, the cost of keeping the business going is much higher.”
Meanwhile, the United States has stopped shipping live cattle from Mexico after the deadly parasite New World screwworm reappeared.
Photographer: Nick Oxford/Bloomberg
Imports from South American countries are expected to benefit consumers, but these supplies are mainly for ground beef and will not provide a quick fix to the cattle shortage.
Further down the supply chain, former Army Ranger Patrick Montgomery, who runs KC Cattle Company outside Kansas City, Mo., was troubled by high prices. Last year he sold much of his herd to replenish genetic bloodlines, but soaring costs since then mean he can’t replenish them.
To illustrate his point, Montgomery estimates that five years ago, a so-called bottle calf (a calf raised in a bottle) might have sold for between $200 and $500 on the market. Today, the animals can fetch as much as $1,500 as buyers suck up the calves to fatten them up for slaughter.
“The whole beef and wagyu market is in shambles,” said Montgomery, who raises cattle used to produce products such as Wagyu hot dogs. “Simply put, there are no cattle left in the United States. That may sound like an exaggeration, but historically, numbers have been tight.”
According to the U.S. Department of Agriculture, the average wholesale value of select beef will increase 16% in 2025 compared with the previous year. Even meat-packing giants like Tyson Foods are feeling the pinch. The company’s beef business has posted consecutive quarterly losses since the start of 2024.
While beef burger prices won’t change the broader trajectory of inflation or the outlook for Federal Reserve monetary policy, they illustrate the persistence of price pressures years after the pandemic hit households hard hit by the worst burst of inflation in four decades. The industry has also shown that high borrowing costs can add to pressures across supply chains, with consumers ultimately footing the bill.
Federal Reserve policymakers kept interest rates steady after three consecutive cuts ending in 2025, with some officials continuing to warn that inflation remains above the central bank’s 2% target. “Rising food inflation is a very clear impact on consumer inflation expectations and will remain a thorny political issue in the year ahead,” said Megan Fisher of Capital Economics.
Photographer: Nick Oxford/Bloomberg
The price shock comes in a crucial year for Trump, with voters making the high cost of living a central issue in congressional midterm elections. The White House has claimed success in reducing stubbornly high egg costs, which are down 34% from a year ago as the industry recovers from bird flu.
Achieving similar results for beef prices will be difficult given the complexity of the industry’s supply chains and the long cycle of replenishing the herd.
Trump ordered a federal investigation into the meatpacking industry, blaming “mostly foreign-owned” companies for the price surge, and tasked the Justice Department with investigating meatpackers, accusing them of collusion, price fixing and price fixing.
Meatpackers have long been the focus of criticism for being too concentrated and have paid hundreds of millions of dollars to settle pricing and antitrust lawsuits.
But currently these companies are losing money on beef and rely on other proteins like chicken to stay profitable. Tyson Foods, Cargill Inc. and JBS NV have all announced beef plant closures, and processing capacity may need to be reduced further to accommodate reduced supplies.
The number of beef replacement heifers (or young cows used for breeding) as of January 1 was 1% higher than at this time last year, which shows how slow replenishment is.
Joe Myers, owner of Myers Angus Farm in Kentucky, said the animals are still worth a lot on the market, so the cost of raising them long-term “isn’t really cost-effective,” especially given rising interest rates. “People are a little scared, for lack of a better term, to put that kind of investment into open young heifers and take on all these built-in costs.”
