The situation: Grocery prices have been rising over the past five years thanks to a mix of factors including low crop yields, geopolitical shocks, supply-chain bottlenecks, and—more recently—tariffs.

• For example, grocery prices were up 2.7% YoY in September, according to the most recent US Bureau of Labor Statistics report, with staples such as bananas rising 6.9%, beef and veal prices up 14.7%, and coffee up 18.9%.
• Middle- and low-income consumers are feeling squeezed because their after-tax wages haven’t kept pace with inflation since January, per the Bank of America Institute.
• The pressure is also pronounced for federal student loan borrowers, 42% of whom say their monthly payments are making it difficult to afford groceries and other basic needs, per a forthcoming Data for Progress and The Institute for College Access & Success survey cited by CNBC. That’s worth noting given that more than 42 million Americans—roughly 1 in 8—hold student loans, and a growing share are falling behind on their payments. Over 5 million borrowers are already in default, and the Trump administration earlier this year warned that number could soon double.

Addressing the problem: President Donald Trump is beginning to take steps to address the challenge.

• In November, he issued an executive order exempting foods like beef, oranges, and cocoa from his sweeping country-by-country tariffs.
• Another executive order issued over the weekend directed the Justice Department and Federal Trade Commission to establish task forces to investigate potential food price-fixing by foreign companies.

Foreign businesses and capital play a significant role within the American food supply. For example, two of the so-called Big Four meatpackers that control more than 80% of the market (JBS and National Beef) are subsidiaries of Brazilian companies. One of the world’s largest pork producers, Smithfield Foods, is controlled by China's WH Group, per Axios.

Why it matters: Few things remind consumers that their paychecks don’t stretch like they used to more than rising prices at the grocery store or gas pump.

• That helps explain why nearly half, 46%, say the cost of living in the US is the worst they can ever remember, per The POLITICO Poll conducted by Public First. That sentiment is even held by almost 2 in 5, 37%, of 2024 Trump voters.
• Those results align with a Gallup poll conducted in November and released last week, which found 68% of consumers believe the economy is getting worse.
• Those sour perceptions are affecting holiday budgets. In Gallup’s October and November surveys, the average amount consumers planned to spend on gifts dropped $229. While households often trim plans as the season progresses, this year’s midseason decline is the largest Gallup has ever recorded—exceeding the $185 drop during the 2008 financial crisis, when holiday sales fell about 3% YoY.
• Still, far fewer respondents say they’ll spend less than last year compared with 2008, suggesting today’s outlook isn’t as bleak as it was during the Great Recession holiday season.

Our take: Trump’s executive orders are unlikely to have a meaningful near-term impact on food prices or, more importantly, on the broader pressures those prices place on consumer spending. Perceptions won’t improve meaningfully unless households get tangible relief in their day-to-day costs. Beyond inflation, consumers are uneasy about a shaky labor market, geopolitical tensions, and other uncertainties. That backdrop could keep a sizable share of consumers wary of opening their wallets well into next year.

For retailers, this reinforces the need to double down on value through clear pricing, compelling promotions, and loyalty-driven savings so they can meet consumers where they are and prevent caution from turning into reduced spending.