Earlier this year, I travelled across Texas on a long-planned US road-trip. One stop that stayed with me was a visit to La Barbecue in Austin – a BBQ spot that has recently been recognised by the Michelin Guide. At La Barbecue, a pound of brisket cost $36 – a price that reflects not only the craft and expertise of the pitmaster but also the broader pressures affecting beef costs across the US. This mirrors widespread, national headlines about inflation, and local food prices are a reminder that macroeconomic trends have real-world effects.
This trip prompted me to reflect on my exposure to currency fluctuations. While a weaker dollar gave me a boost to my holiday spending money, US tourists visiting London in recent months have found themselves on the less favourable side of this exchange. The same principle applies to UK-based investors holding US dollar–denominated assets. It’s not enough for US equities or bonds to perform well - their value must also be considered in sterling terms too.
The roots of US food inflation in 2025 are a combination of supply constraints (from drought to herd reductions) and persistent demand. The cattle inventory in the United States has dropped to its lowest point in almost 75 years, and the country has seen a decline of over 150,000 cattle ranches since 2017. Government data confirms the trend: US consumer food prices rose 3.1% in the year to September 2025, with beef and steak prices jumping by over 12% and 16% respectively. 1 These increases highlight ongoing supply challenges in the beef industry and a wider pattern of US cost-of-living pressures.
While general US inflation has moderated from its post-pandemic peaks, underlying pressures remain. This has real world consequences: high food price inflation influences consumer sentiment, political debates and, crucially, central bank policy.
Despite the sometimes-conflicting signals from market data, the Federal Reserve (Fed) has continued to ease policy in the second half of 2025, pivoting away from the aggressive tightening seen in prior years. At its latest December meeting, the Federal Open Market Committee (FOMC) delivered a third consecutive 25bp cut, although the decision was not unanimous - with some policymakers arguing for a larger move and others for no change.
This evolving economic landscape has contributed to a softening US dollar. In 2025 we have seen the dollar fall materially against sterling. The US dollar has been weighed down by signs of slowing US growth, political uncertainty and fiscal concerns.
| Date | GBP/USD | % Change (YTD) |
|---|---|---|
| 1 Jan 2025 | 1.25 | — |
| 11 Dec 2025 | 1.34 | +6.9% |
While a weaker US dollar has diminished certain investment returns for UK investors with overseas US holdings, we should remember that for many years prior, a strong dollar has meant a positive tailwind for many UK investors with global portfolios. Of course, for travellers, the currency impact can partly offset the jump in US food prices and get you more brisket per pound, at least for now.
It’s also a reminder that the forces shaping prices on a Texas restaurant’s menu can be the same ones driving global markets.
This year’s brisket bill in Austin reflected more than just a good meal; it was a snapshot of inflation, politics and economic policy at work. For UK investors, the weaker dollar and expectations of lower US interest rates are important reminders to look beyond the headlines, considering both local and global dynamics can give us great insights into the wider investment landscape.
[1] US beef prices are soaring. Will Trump's plans lower them? - BBC News
[2] FactSet
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