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June 20, 2025
Will Tariffs Reignite Food Inflation?
Many consumers believe tariffs are playing the primary role in driving food inflation, with many expecting they’ll only drive prices higher later in the year.
A recent survey from The Feedback Group found that 61% of U.S. supermarket shoppers feel stressed about rising grocery prices. Respondents believe the leading cause of food inflation is government policies and actions (mean score of 4.11 on a five-point scale), followed by product manufacturers and suppliers (3.49), wars/worldwide conflicts (3.39), and supermarket retailers (3.22).
The “government policies and actions” answer could reference the fallout from pandemic-related stimulus spending, but the latest relevant concern is tariffs.
Of the respondents, 95% were aware of proposed tariffs. Among tariff-aware shoppers, nearly half (47%) were “very concerned” tariffs would impact their grocery bills, with 49% seeing prices rising “significantly” and 34% “somewhat.”
A survey from Blue Yonder of consumers in Australia/New Zealand (ANZ), France, Germany, the Middle East, the UK, and the U.S., taken in May, found 85% concerned about grocery inflation.
Similar to Feedback’s findings, nearly half (49%), including 65% of U.S. respondents, believe newly introduced tariffs are the leading factor behind inflated grocery prices, followed by increased costs for raw materials (42%), higher labor costs (39%), and increased profit margins for brands (33%).
The findings come as food-at-home inflation has tapered off significantly from the high single-digit and low double-digit rates seen from mid-2021 through 2022.
In May, food-at-home prices were up 2.2% year over year. At their peak, grocery prices soared 13.6% in August 2022 and are now about 27.8% more expensive than they were before the pandemic, according to analysis by Bankrate.
According to the USDA, the hyper-inflation rates over 2021 and 2022 were caused by losses of poultry flocks from the Avian flu; the Russia-Ukraine war that increased costs for agricultural commodities, fertilizer, and energy; and a strong labor market that jacked up wages across the food supply chain.
Corporate profiteering has also been cited as a driver in the media and by legislators.
An analysis by the Yale Budget Lab, a nonpartisan research group, that came out in mid-April estimated that recent U.S. tariffs will raise food prices by 2.6% overall in the short run and stay 2.8% higher in the long run. Fresh produce prices were expected to be particularly impacted because the category relies on imports from Canada, Mexico, and China.
Circana analysis has listed seafood, produce, alcohol, and baking ingredients among categories more susceptible to price hikes from tariffs due to their reliance on imports, while dairy products, most meats, shelf-stable breakfast foods, and frozen meals were seen as less susceptible since they’re largely domestically produced.
Assessing May’s inflation figures, Andy Harig, VP of tax, trade, sustainability, and policy development at FMI – The Food Industry Association, noted that increased steel and aluminum tariffs announced earlier in June may impact packaging costs for food items like canned vegetables and beverages as well as capital costs like store construction. However, he said the overall “impact of tariffs on food prices remains muted.”
Discussion Questions
Are tariffs increasing or likely to increase grocery prices this year?
How should grocers respond to consumer anxiety over food prices and the likely arrival of broader inflationary pressures?
Poll
Loading …BrainTrust
Nolan Wheeler
Founder and CEO, SYNQ
Carlos Arámbula
Principal, Growth Genie Partners
Cathy Hotka
Principal, Cathy Hotka & Associates
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Current tariffs will push up food prices. If the country specific tariffs are reapplied, then prices will increase even further. There is the immediate and direct cost to things we import. There is also the secondary impact which takes longer to filter through. Farmers and processors, for example, need to replace machinery over time, and higher costs here will need to be factored into the price the consumer pays. The particular problem with food is that the whole supply chain has very tight margins, so there is not much padding to absorb higher costs.
Of course, in many instances this is all very cack-handed as we have no domestic industries to ‘protect’ in commodities like coffee (well, excluding Hawaiʻi and some small batch production elsewhere – which produces nowhere near enough for domestic needs).
I suspect we don’t want too many industries to protect commodities. Look what we did with sugar tariffs over 100 years ago. BTW, it is on of my favorite stories for my classes.
Protect is in inverted commas for precisely this reason!
This one is always interesting. The implications have reached far and wide.
You’ve given a very thoughtful set of answers to something that, to me, at least, is pretty obvious.
Yes, I agree. It is obvious, at least to us. The secondary impacts often get overlooked by some folks.
Does the sun rise in the East? How many people will have to tell us this is an inflationary move before we believe them? Honestly, what do you think???
I will confess food is not high on the list of items for which I most expect to see large tariff-related increases. since food is not generally imported in the same way that something like steel or textiles are (obviously there could be exception for things like chocolate or wines). Of course there could be spinoff effects (e.g. someone mentioned the cost of making tin cans). But heck, isn’t it worth the inconvenience if in the end it brings banana production back to Kansas ?
Will avocados cost more? Hard to say without clear cut guidance from the White House from one day to the next about the existence of a “deal.” But there will be other less visible causes of food inflation, from tariffs on steel and aluminum to the pursuit of undocumented farm and meat packing workers.
Was hearing over the weekend how the cherry harvest in Washington State is basically not happening & fruit is rotting on the trees due to ICE harassment & community fear. So triple whammy: no fruit on US shelves, loss of big export revenue, and local spending collapse. Heckuva job!
There’s no “likely” about it—food prices will rise because of tariffs.
Grocers will try to soften the impact through value messaging, private label promotions, and familiar loyalty programs. But these measures won’t be enough to help consumers’ anxieties who are also dealing with falling incomes and rising costs across other categories due to tariffs.
The real solution isn’t in how grocers manage consumer anxiety—it lies in a unified, industry-wide effort to push back against the tariffs themselves.
The only reason people aren’t perceiving increased prices is the continual shrinking of packaging. That Peet’s coffee in the 12-oz bag is now in a 10.5-oz bag for the same price. I bought a bag of chips the other day that made me laugh out loud; it looked like a single-serving bag.
61% of supermarket shoppers are stressed about rising grocery prices so I think there is a fair number who do indeed perceive increased prices. Fair point that it might have been worse without shrinkflation.
Besides the obvious direct price increases in imported fruits and vegetables, there are second and third-order effects that are harder to gauge precisely but combine to directionally push prices higher. Tariff-impacted raw and packaging materials, as well as agricultural inputs such as fertilizers, pesticides, and farm equipment parts, and food processing machinery and logistics truck parts, provide us with layered inflation vectors that impact actual inflation. So, it’s not a question of whether tariffs will drive grocery prices up, but when and how much.
Many grocers will soon look or are already looking for product alternatives with distributors and brokers as we head into the fall and winter seasons, when fresh items are imported. Starting with product options as Made in the USA or from a tariff-friendly country, the key to success here will lie with suppliers who will go the extra mile to help. Otherwise, tough decisions will get made, applying downward pressures on cost, or margin, or raising retails, likely all of the above.
Increase in Tariffs = Increase in prices. Very linear although not necessarily one to one.
Tariffs will inevitably raise costs for consumers. Grocers can’t control that, but clear communication and working with suppliers to find deals or alternatives can help ease shopper anxiety. Shoppers want to feel informed, not surprised by rising prices.
Great point, Nolan. As the author of The Feedback Group research cited, communication with shoppers is an area that supermarkets need to strengthen when it comes to being perceived as on the shopper’s side when it comes to inflation, on why prices have risen, and on the impact of tariffs.
It’s a simple ‘yes’. Between tariffs and ICE, food prices are going to rise.