How ‘Foodflation’ is Impacting Consumers: What You Need to Know from The Food Institute

Consumers are feeling the pinch as food prices are on the rise, a trend often called “foodflation.” Retailers face pressure to hike prices due to tariffs and supply chain issues. Big names like Hormel Foods and Ace Hardware are already raising prices, and it doesn’t look like the trend is reversing anytime soon.

At Best Buy, CEO Corie Barry noted that vendors are raising prices while tweaking promotions. Prices for meat and produce have already surged, and tariffs are likely to push them even higher. New Yorker James Paternoster expressed his shock at the rising cost of beef: “I couldn’t believe how fast it went up.”

So, why are grocery bills climbing? One reason is that during the pandemic, many farmers had to cull their herds because they couldn’t sell livestock, which is now causing meat prices to soar. Produce costs have also jumped 16% compared to last year. Coffee lovers should brace themselves too; a 50% tariff on Brazilian coffee is set to make your daily brew even pricier. According to a Purdue University survey, food inflation is up to 5.3%, showing consumers’ expectations for future price hikes are rising as well.

Experts predict supply chain uncertainties caused by tariffs will keep inflation high for the foreseeable future. A report from Kearney warns that these disruptions are likely to persist.

School lunches offer another lens on this inflation issue. A recent Deloitte report found nearly half of parents expect prices to increase. They surveyed lunch favorites, from peanut butter and jelly to chicken quesadillas. “The cost of food will continue to rise as production costs escalate,” stated Babak Hafezi, an adjunct professor of international business. He emphasized that the inputs, including energy and labor, keep climbing, creating a ripple effect on food prices.

Interestingly, Millennials are adapting by reducing their purchases of fresh foods to cut down on waste. As per the report, they are the most likely generation to limit perishable items, with many switching from brand-name products to cheaper alternatives. The average cost of a school lunch has reached $6.15, showing a 3% increase since the start of the 2024 school year, while overall grocery prices have surged 23% since 2022.

This trend isn’t isolated to the U.S. The FAO Food Price Index revealed a 1.6% rise in prices globally from June to July, driven primarily by meat and vegetable oil costs, up 7.6% from last year.

As consumers adapt to these changes, one thing is clear: the landscape of food pricing is shifting, and many are left re-evaluating their spending habits.

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