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Consumers aren’t over inflation
Recent data indicates shoppers only expect it to continue in 2025
3 Min Read
Year-ahead inflation expectations from consumers soared in the month of January with consumers only anticipating more (and potentially worse) to come.Getty Images
Year-ahead inflation expectations from consumers soared in the month of January with consumers only anticipating more (and potentially worse) to come, according to a recent report from the University of Michigan.
Biggest news for grocery
Grocers and shoppers have been grappling with inflation for years now, and news that consumers expect a continuation of high prices over the next year is unsettling. Inflation took center stage during the 2024 presidential election, with both Vice President Kamala Harris and President-elect Donald Trump vowing to fix the problem. But Trump has since backpedaled on the notion that inflation is an easy fix., When asked by TIME if his presidency would be considered a failure if he doesn’t manage to bring the cost of groceries back down, he responded, “I don’t think so. I’d like to bring them down. It’s hard to bring things down once they’re up.”
Trump’s more recent plan to increase tariffs is partly what’s fueling consumer concern regarding inflation. Dollar stores have already sent out smoke signals that prices in their aisles will be impacted if such tariffs are put in place. But since most U.S. food items are not imported, it’s unclear how grocery prices will be impacted by a high level of tariff activity. Let’s also remember that there is some precedent here, i.e. Walmart CEO Doug McMillon warning the grocery industry that food inflation would tick up during the opening months of 2025
Why it matters
To date, inflation has caused a big shift in consumer shopping behaviors. Private label brands saw record growth in 2024, and even wealthy consumers started shopping at the Walmarts, Aldis, and dollar stores to save a buck. In terms of private label, sales of private-label products reached record-high market shares in both units and dollars during the first half of the year, and the Private Label Manufacturers Association estimates that store brand revenue will exceed $250 billion, which would set a new record for annual sales. An October report from FMI indicates that 90% of grocers are planning on either moderately or significantly increasing their investment in private-label brands over the next two years. So expect grocers to continue to lean on their own brands in 2025.
More detail
Year-ahead inflation expectations from consumers jumped from 2.8% in December to 3.3% in January, marking the highest reading since May 2024, according to the University of Michigan report
Long-run inflation expectations rose from 3.0% in December to 3.3% in January, marking only the third time in the last four years that long-run inflation expectations have exhibited such a large one-month change
In November, food at-home prices went up 0.5% compared to October. It was the second time in three months retail food prices outpaced restaurant menu prices
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