Despite the warnings that last summer's historic drought would drive up the cost of food, prices rose only 2.6 percent in 2012, down from 3.7 percent growth in 2011, according to the USDA.
Inflation slowed nearly 50 percent for food bought at grocery stores, while it jumped for food bought at restaurants. Prices in 2012 rose significantly for beef, poultry, fats and oils, but pork prices stayed basically flat and prices for fresh vegetables dropped. (Read More: Drought Still Plagues US: Food Prices 'Going Up'.)
Many of these trends are expected to reverse in 2013.
This year the USDA expects overall food inflation to rise between 3 and 4 percent, "above the historical average." It expects prices to rise especially during the first half of the year, as livestock producers have depleted their herds due to the high cost of feed last fall. This initially created a glut for meats like pork, where prices in December were more than three percent lower than the year before.