**Washington**: The grocery sector contends with inflationary pressures and potential tariffs on imports from Mexico and Canada. FMI experts discuss rising food prices, notably eggs due to avian flu, and advocate for consumer adaptation in meal planning to manage costs amidst uncertainty.
The grocery industry is currently navigating a series of challenges, including inflation and potential tariffs on imports from Mexico and Canada, according to findings from FMI – The Food Industry Association’s 2025 Inflation & Food Price Outlook. During a media briefing held on March 6, Andrew Harig, FMI’s Vice President of tax, trade, sustainability, and policy development, discussed the implications of these issues and their effect on consumers.
Harig pointed out that recent inflation data presents mixed signals. “Overall inflation was up 0.5 percent from December, which is the same as the food-at-home increase of 0.5 percent, so we’ve got a little bit of a mirroring process going on there,” he explained, referencing the January Consumer Price Index data. However, he noted that on a year-over-year basis, food-at-home inflation had risen at a slower pace than overall inflation, providing some respite for consumers. “Since January 2024, overall inflation increased 3 percent, but food at home increased just 1.9 percent over that same period,” Harig added, calling this “good news for American consumers.”
Despite this positive note, Harig highlighted that nearly two-thirds of the increase in food prices was due to a dramatic surge in egg prices caused by an ongoing outbreak of highly pathogenic avian influenza. Ricky Volpe, an associate professor of agribusiness at Cal Poly, indicated that these egg prices have reached historical highs, observing, “In the 15 years I’ve been tracking CPI numbers, that’s the biggest number I’ve ever seen on these tables.” The avian flu outbreak is not only affecting the cost of eggs but also extending to other products that rely heavily on eggs, such as baked goods and mayonnaise.
FMI is encouraging its members and customers to adapt to these challenges by consulting in-store registered dieticians and nutritionists for meal planning and substitutions. Harig remarked, “Shoppers are nimble. They’re using all the tools in their toolbox. They’re buying different brands… shopping at different stores and substituting eggs with other products, or in some cases just buying less and finding other meal alternatives to serve their families.”
The inflation issue extends beyond eggs, as other categories like beef, veal, and sugar are also witnessing above-average price increases due to specific supply chain difficulties. Volpe stated that “the beef cattle inventory in the U.S. is at its lowest level since 1951,” attributing this to high input costs and interest rates, while adverse weather conditions in South America and Western Africa have driven up the prices of sugar and cocoa.
Despite these hurdles, Volpe reported that a significant majority—81 percent—of food and beverage categories monitored by the Bureau of Labor Statistics’ food price outlook are trending towards below-average inflation in 2025. “That’s a piece of good news,” he said, suggesting that shoppers who are willing to adapt could still manage their food spending effectively.
The impending concerns surrounding tariffs on imports from Mexico and Canada remain persistent. President Donald Trump’s administration has recently announced a 30-day suspension of tariffs on Mexican products, but discussions regarding Canada remain unresolved. Harig noted, “Tariffs are inflationary overall, and this is definitely an uncertain time,” emphasising the economic relationship between the U.S. and its North American neighbours, which plays a vital role in the U.S. food supply and job creation.
Analysis from the Peterson Institute for International Economics estimates that a 25 percent tariff on goods from both Canada and Mexico could cost the median U.S. household an additional $1,200 annually. Harig highlighted that Mexico and Canada are crucial trade partners, accounting for $90 billion in agricultural imports each year.
The proposed tariffs include a 25 percent levy on agricultural goods and additional tariffs on energy products and Chinese imports. Harig explained that the impact of these tariffs would differ based on product types, noting that fresh produce would likely experience a more direct price increase compared to highly processed goods.
Moreover, the potential imposition of tariffs on steel and aluminium—critical materials for food packaging and transportation—could further complicate pricing structures within the grocery sector. “These steel and aluminium tariffs will likely translate into higher costs for consumers,” Harig stated.
Consumer behaviour has demonstrated a degree of resilience amid these challenges. According to FMI’s March Grocery Shopper Snapshot, shoppers report a mix of optimism and concern regarding their grocery budgets. Volpe argued against the notion that dining out is cheaper than cooking at home, citing substantial price increases in restaurants as compared to grocery prices.
As the industry prepares for potential tariff impacts and ongoing supply chain issues, Harig reaffirmed the necessity of adaptability within the sector. “Consumers and the food industry must remain nimble to adapt to these uncertain times,” he concluded.
Source: Noah Wire Services
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