Food Inflation in the U.S.: A Strategic Reckoning for Food Sector Leaders
This article first appeared in the September 2025 issue of Presence Marketing’s newsletter.
By Steven Hoffman
In 2025, food inflation in the United States has transformed from a passing concern into a defining business challenge—and opportunity—for leaders across the food ecosystem. A 3% year-over‑year increase in overall food prices, including 2.4% for groceries and 3.8% for restaurant meals, may seem modest. Yet beneath those figures lie sharper, more disruptive trends: surging prices in staples such as coffee, ground beef, and eggs; strategic responses from consumers and retailers; and structural pressures that demand both resilience and reimagining. Business strategists in the food sector must now lead with insight, not just facts.
A Collision of Climate, Cost, and Policy
Climate volatility continues to drag on food supply and costs. Extreme drought in U.S. cattle belts, heat waves in crop regions, and pest outbreaks such as avian flu have propelled food inflation beyond headline figures. Coffee is up 13.4%, ground beef 10.3%, while eggs have spiked 27.3%, putting extraordinary strain on manufacturers and squeezing household budgets (Axios).
Adding to the upward pressure are sweeping tariffs introduced by the Trump administration, with tariffs on imports from Brazil and India reaching 50%. The tariffs are already working their way into the cost of everything from meat and produce to metals used in cans and packaging (The Washington Post). According to the Yale Budget Lab’s estimates as of August 7, 2025, consumers face an overall average effective tariff rate of 18.6% – the highest since 1933 – and the impact is projected to cost U.S. households an extra $2,400 per year.
Meanwhile, immigration enforcement over the past several months has destabilized farm labor. In California’s Oxnard region, intensified ICE activity has slashed agricultural labor by 20-40%, leading to $3-7 billion in crop losses and driving produce prices up 5% to 12%, according to research published in August 2025 from Cornell University. Simultaneously, cuts in SNAP and other supports have strained both consumer access and farm revenue—especially for smaller producers—plus, grocers in rural communities and elsewhere that depend on SNAP programs feel that impact much harder (Climate and Capital Media).
Beyond cost drivers, the retail margin picture is fraught. Analysis from the White House Council of Economic Advisers showed grocers’ profit margins rising 2 percentage points since before the pandemic—reaching two-decade highs—while “shrinkflation” and package downsizing quietly preserve profitability (Grocery Dive).
FMI—The Food Industry Association’s study released in July 2025, “The Food Retailing Industry Speaks 2025,” reveals an industry struggling to navigate challenging economic conditions, largely due to policies implemented during the Trump administration. According to FMI, about 80% of both retailers and suppliers anticipate that trade policies and tariffs will continue to affect pricing and disrupt supply chains. Most grocers expect operating costs to remain high (Supermarket News).
Consumers Are Stressed About Rising Prices
Recent polling reveals that nearly 90% of U.S. adults are stressed about grocery prices—with half calling it a major stressor. As a result, Americans are responding to these pressures with pragmatic and inventive shifts. Consumers across income levels are tightening the belt, leveraging buy-now-pay-later options, getting creative with savings, and turning to food banks when they must (AInvest).
Shopping behavior reflects this anxiety—and innovation. RDSolutions reports that 86% of consumers now buy private-label products, with price cited as the primary decision factor; 42% opt for cheaper alternatives; while 20% skip items altogether. Data from The Feedback Group shows 61% of supermarket shoppers use sale-driven habits—buying on promotion, eating more at home, and choosing store brands over national names (Progressive Grocer). Meanwhile, many households lean on grocery hacks such as careful list-making, midweek shopping, loyalty programs, and bulk purchases to maximize savings (Times of India).
Even amid tightening budgets, shoppers haven’t completely abandoned pleasure, however. KCI’s “stress index” reveals that consumers crave “affordable luxuries” and product discovery—seeking balance between taste and value. In fact, 68% of consumers surveyed prioritize taste over price, while one-third still prioritize lowest-priced options (Food Dive).
In a fresh produce market reeling from the effects of inflation and immigration enforcement, one consumer trend remains strong: Health continues to drive purchases of fresh fruits and vegetables. According to The Packer Fresh Trends 2025 report, published in August 2025, 72% of shoppers say their primary reason for buying produce is to support a healthy lifestyle. However, price pressures loom larger than ever, with 44% of consumers now saying that cost is the top factor in deciding what to buy, up from 39% last year. As households juggle tighter budgets, they’re opting for familiar staples over experimenting with newer or higher-priced options (Farm Journal).
For lower income individuals and families, higher food prices are resulting in less consumption of healthier food options, with the result that Americans are not eating enough fruits, vegetables, and other nutrient-dense foods. Instead, they are choosing sugary and ultra-processed foods, which tend to be cheaper and last longer.
"There's evidence that inflation continues to shape food choices, particularly for low-income Americans who prioritize price over healthfulness," Constance Brown-Riggs, a registered nurse and nutritionist specializing in diabetes care, told Northwell Health. "These results highlight the disparity in how income influences food priorities," she continued, adding that higher food prices often increase food insecurity. "These shifts increase the risk of chronic diseases such as diabetes, heart disease and obesity."
Even so, there is some opportunity on the horizon. The Packer Fresh Trends 2025 report shared some bright spots, including the fact that Millennials and Gen Z are leading the way on trying new products, exploring organic options, and prioritizing convenience, including prepped veggies and grab-and-go fruit packs. In addition, interest in organic remains strong, with 22% of consumers purchasing organic always or most of the time, particularly among younger and higher-income households.
Grocers, Brands, and Manufacturers Corral Cost Pressures
The reaction from retailers and manufacturers has been tactical and dynamic. Major chains are reevaluating supplier cost increase requests, pushing back aggressively against inflation on branded items. Meanwhile, grocers are ramping up private-label assortments (Investopedia).
Businesses like Aldi are demonstrating how cost leadership can go viral: A summer discount campaign across 2,550 stores marked down 400 items by up to 33%, estimated to save shoppers $100 million. Fast-food chains are responding with value menu bundles—their way of catering to cash-strapped consumers without sacrificing frequency (The Wall Street Journal).
In the natural channel, retailers such as Natural Grocers are emphasizing value, loyalty programs and sales to draw shoppers. For its 70th anniversary in August, Natural Grocers leveraged deep discounts across its nearly 170 stores in 21 states—up to 60% off on more than 500 products—to tap into consumer demand for affordability and quality. According to AInvest, the campaign “sets a benchmark for value-driven retail” by blending “nostalgia, discounts and loyalty incentives to boost sales and customer retention.”
As demand for better-for-you foods remains strong among health-conscious consumers, Jay Jacobowitz, president and founder of Retail Insights, told Supermarket News that many retailers in the natural and independent space experienced a strengthened second half of 2024 and first quarter of 2025, as less price-sensitive consumers make personal health and wellness a priority. Smaller retailers “are going to have increased (economic) pressure, but it’s not pressure that they’re unfamiliar with dealing with,” he said.
Manufacturers are similarly pressured. They face rising raw material, labor, and energy costs, yet retailers limit how much of that inflation they pass through. Many are resorting to smaller or reformulated packaging, trimming promotions, and optimizing sourcing strategies to protect shelf placement (Columbus CEO).
Yet even in the last few weeks, food makers are succumbing to the need to raise prices as the longer-term effects of tariffs, economic policies, and supply chain disruption kick in. On Aug. 7, 2025, Forager Project co-founders Stephen Williamson and John-Charles Hanley announced the following on Instagram:
“Like many food makers, we’ve been feeling the effects of rising ingredient costs—especially for our beloved cashews (up 52%) and coconuts (up 113%). We’ve held off as long as we could, but to keep making food the right way, a price increase was necessary. What hasn’t changed? Organic ingredients, ethical sourcing, planet-healthy practices.”
At the agricultural level, the disconnect is acute. Farmers receive only about 16 cents back from every retail food dollar spent—and that fraction must cover skyrocketing seed, fertilizer, and machinery costs (Washington Post). Some farmers still support tariffs, believing they will yield long-term trade gains; others see them as a short‑term hit to margins (Investigate Midwest).
Strategy: Adaptation, Advocacy, and Resilience
Current forecasts from the USDA suggest moderate gains: food-at-home prices rising around 2.2% for 2025 and restaurant prices about 4%. But the structural challenges—climate, policy, labor, and pricing power—carry implications far richer and more urgent than those figures alone (Food & Wine).
For food-sector professionals, the directive is clear: Strategies must be multidimensional.
1. Reinvent Pricing & Perceived Value
Offer tiered, smaller, or private-label packaging; highlight affordable luxuries and discovery moments in-store and online. Aldi’s shelf reset, Sprouts Farmers Market’s value-based positioning, and Natural Grocers’ emphasis on savings and its frequent buyer program demonstrate ways to drive loyalty and savings.
2. Strengthen Supply Chain Flexibility
Diversify sourcing, invest in climate-resilient inputs, and forecast for volatility. Manufacturers need contingency plans for both weather and trade disruptions.
3. Align Expectations & Margins
Increase analytics around cost impacts and pass-through capabilities. Supplier–retailer partnerships should define fair margin boundaries and shared value strategies for inflation periods.
4. Advocate for Systemic Support
Engage policymakers to safeguard labor stability—through H-2A visa expansions or by regularizing undocumented workers—and to secure tariff relief for food essentials and farm inputs.
5. Build Resilient Retail Formats
Simplify offerings to reduce shopper anxiety and stock-outs. Grocery models like Aldi or Sprouts’ curated “innovation centers” help drive discovery while managing complexity.
A New Epoch for Food-Business Leadership
Food inflation in 2025 is less an anecdote than a wake-up call. When climate shocks strike, tariffs bite, and labor becomes unstable overnight, businesses that only react are left behind. But those that blend adaptive execution, strategic policymaking, and bold market positioning are building enduring advantage.
Consumers may feel squeezed, but they’re still looking for experiences that feel smart, authentic, and human. Retailers, suppliers, processors, and farmers must each meet them there—delivering value, stability, and insight. Because in this new era, food-sector leadership is not just about pricing; it’s about crafting trust in uncertain times—and reshaping food systems to weather today’s storms and make the most of tomorrow’s opportunities.
Steven Hoffman is Managing Director of Compass Natural Marketing, a strategic communications and brand development agency serving the natural and organic products industry. Learn more at www.compassnatural.com.
Can Publicly Run Grocery Stores Solve Food Deserts — and Deliver on Nutrition Equity?
As New York and Chicago explore city-run supermarkets, new models — public, nonprofit and cooperative — are reshaping the business of feeding underserved communities.
This article first appeared in the August 2025 issue of Presence Marketing’s newsletter.
By Steven Hoffman
When New York Assembly member and mayoral candidate Zohran Mamdani proposed opening five city-run grocery stores—one in each borough—he reignited a debate that cuts to the heart of capitalism, food justice, and municipal responsibility. Critics labeled it a socialist fantasy. Proponents called it long overdue. But behind the political theater lies a legitimate question: Can publicly operated grocery stores succeed where the private market has failed?
Across America, millions live in low income, low access (LILA) markets—communities without easy access to affordable, nutritious food, or what many in the media refer to as food deserts. In these neighborhoods, fast-food outlets and corner stores predominate, while supermarkets are few and far between. For decades, policy solutions have focused on tax incentives or subsidies to lure grocery chains into underserved areas. Often, those stores don’t last. Mamdani’s proposal dares to flip the script: If the private sector won’t meet the need, let the public sector step in.
Pixabay.com
It’s not an entirely new idea. In small towns and major cities alike, experiments in publicly owned, nonprofit, or cooperative grocery models have taken root. Some have succeeded. Others have shuttered. Together, they paint a nuanced picture of what it takes to make public grocery stores work—and where they can go wrong.
The Rural Proof-of-Concept
With corporate consolidation leading to fewer grocery store options as food prices soar, “people are clamoring for solutions, and that’s leading to creative thinking on what might work,” Ganesh Sitaraman, Director of the Vanderbilt Policy Accelerator, told the Food and Environment Reporting Network. Sitaraman recently published a report, Public Grocery Stores: A Guide for Policymakers.
In St. Paul in rural southeastern Kansas, a town with a population of 600, a municipal grocery store has been in operation since 2013. After the town’s last private grocer had closed, residents faced a 30-minute drive to the nearest supermarket. Rather than accept that future, the city council voted to open its own store. St. Paul’s model is humble, offering a basic selection of staples, fresh produce, and frozen goods. It doesn’t need to generate big profits—just enough to keep the doors open. In that way, it functions like any other public utility: not glamorous, but essential. More than a decade later, it remains in business.
Not every rural experiment has succeeded. In 2019, the town of Baldwin, Florida, opened a city-run grocery store, but by 2024, it had closed its doors. The reasons? Low foot traffic, challenges sourcing competitively priced goods, and the gravitational pull of the nearby Walmart. The lesson: Public stores face the same economic headwinds as private ones, and without a clear strategy and strong local buy-in, they may struggle.
A City of Contradictions
Chicago offers a case study in both the fragility of private grocery models and the resilience of community-driven alternatives. Between 2013 and 2021, the city lost at least 20 full-service grocery stores, many in predominantly Black and Latino neighborhoods on the South and West Sides. In 2022, Whole Foods Market closed its Englewood store just six years after opening with $10.7 million in city subsidies. For residents, the closure felt like a betrayal and a confirmation that public-private partnerships may not always prioritize community needs (Block Club Chicago).
But even as chains exit, grassroots solutions are emerging. The Go Green Community Fresh Market, launched in Englewood in 2022, is a nonprofit market developed in partnership with local organizations and institutions. It offers fresh produce, pantry staples, and prepared foods in a space designed to reflect community needs.
According to a report in Next City, the store is part of a broader movement toward community-led food infrastructure. Unlike traditional grocers, these models often blend retail with education, workforce development, and health services. They’re small but mighty—and in many cases, they’re succeeding where big box stores have failed.
Chicago’s city government has taken notice. In 2023, the city commissioned a study on the feasibility of municipal grocery stores. The findings, published in 2024, estimated that opening three stores would cost around $26.7 million (Chicago Sun-Times). Critics balked at the price tag. Advocates pointed out that the city has spent far more on failed economic development deals.
Mayor Brandon Johnson has voiced support for continued exploration. His administration sees food access as part of a broader public health and equity strategy—one that requires thinking beyond the boundaries of traditional retail.
New York’s Big Swing
In New York, Mamdani’s plan has drawn national attention. His proposal envisions five city-operated grocery stores with a focus on affordability, accessibility, and cultural relevance. The goal is not just to provide food, but to provide good food—including fresh produce, whole grains, and organic staples—at prices families can afford.
The backlash has been swift. Billionaire grocery executives and conservative commentators warn of government inefficiency, cost overruns, and mission creep. The Wall Street Journal editorial board argued that the plan would replicate “all the flaws of a Soviet commissary.” Mark Cuban quipped, “None of that s*** has a chance.”
But Mamdani remains undeterred. “We treat food like a luxury when it should be a public good,” he told Bloomberg. He sees the city-run grocery model as a form of infrastructure—akin to schools or libraries—that delivers long-term social ROI, not quarterly profits.
Public support appears strong, especially in districts hit hardest by inflation and store closures. In a city where the average grocery markup can exceed 25% in low-income neighborhoods, the idea of subsidized pricing resonates—and aligns with Mamdani’s broader political platform centered on economic justice (NBC New York).
Natural and Organic for Everyone?
One of the most compelling aspects of publicly operated groceries is their potential to democratize access to natural, organic, and specialty foods. In most food deserts, such items are virtually nonexistent. For households managing diabetes, allergies, or autoimmune conditions, the absence of unprocessed, nutrient-dense food isn’t just inconvenient—it could be dangerous.
Public stores, especially those not beholden to shareholder profits, could prioritize clean-label foods, support regional regenerative farms, and offer bulk bins, zero-waste options, and plant-based products typically confined to high-end co-ops. By participating in programs like Double Up Food Bucks or SNAP Match, these stores can extend purchasing power for low-income shoppers (Axios).
Imagine walking into a municipal grocery where you can use your EBT card to buy organic lentils, fresh kale, or local mushrooms—and receive a discount for doing so. That’s not just a policy victory; it’s potentially a public health breakthrough. Cities like Madison, Wisconsin, and Atlanta are already exploring similar models, indicating a growing appetite to align food equity with climate and nutrition goals.
Co-ops and Nonprofits: Lessons from the Field
In the space between private retail and public provision lies another model: the food cooperative. Owned and operated by members, co-ops have long served as alternatives to corporate grocery chains. But historically, they’ve skewed toward affluent, mostly white communities.
That’s changing. The Cooperative Development Institute (CDI) has worked to support co-ops in low-income and BIPOC communities across the Northeast. According to CDI, co-ops in food deserts thrive when they reflect local culture, offer accessible membership structures, and receive early technical and financial support.
In the majority Black-led community in Detroit’s North End, the Detroit People’s Food Co-op celebrated one year in business this past May, making fresh produce and products from locally sourced farms and producers more accessible to more than 4,000 co-op members. The term “food desert” doesn’t sit well with co-op general manager Akil Talley ― a desert, he said, is naturally occurring: “We like to call it 'food apartheid,' because a lot of it was intentional," he told the Detroit Free Press. The co-op was founded by the Detroit Black Community Food Sovereignty Network, a nonprofit organization dedicated to teaching residents about the importance of fresh food that is also behind a number of other food sovereignty initiatives.
In Chattanooga, Tennessee, the nonprofit Chattanooga Food Center strives to create a food system that offers affordable and convenient access to healthy food, bridging the gap between producers and consumers. The organization partners with farms located within 150 miles of the city to source fresh produce, meat, eggs and dairy products. Its retail store, Gaining Ground Grocery, located in the Highland Park neighborhood of the city, an area previously bereft of fresh food options, offers discounted groceries alongside nutrition education. All proceeds from the store support the continuing mission of the Chattanooga Food Center. Customers can pay for groceries via a SNAP Electronic Benefits Transfer card, and the store also participates in the Double Up Food Bucks program established by the Fair Food Network which doubles the value of SNAP dollars for fresh local produce.
In Dayton, Ohio, the Gem City Market—a Black-led co-op—was launched in 2021 after a successful community investment campaign with more than 3,200 members. Both serve as proof points that with the right support, co-ops can thrive in marginalized neighborhoods and for many communities, municipal or hybrid public/nonprofit models may offer a more sustainable path.
Yet co-ops and nonprofits face unique challenges: they often require significant volunteer labor, complex governance, and ongoing grant support. Stores in low income areas also rely on such government programs as the Supplemental Nutrition Assistance Program (SNAP), which serves 42 million Americans as a defense against hunger.
For example, Gem City Market is committed to making sure food is readily available to local residents of all income levels, with programs like their “WeGotchu” sale, where they match EBT/SNAP-eligible purchases at 50%. However, the SNAP program is facing the biggest funding cuts in its history with the passage of the 2025 reconciliation bill, aka the One Big Beautiful Bill Act, which could undermine the ability for low income families to access SNAP.
What Failure Teaches Us
Every closure is a lesson. Florida’s Baldwin Market closed because it couldn’t compete on price. Whole Foods Market left Englewood because it didn’t meet its margin targets. Even Rise Community Market in Cairo, Illinois, launched with fanfare, has struggled to maintain sales volume (New Republic).
These failures underscore the importance of three factors: management expertise, community trust, and economic patience. A grocery store is an operations-intensive business. Success depends on efficient procurement, cold chain management, labor stability, and pricing strategy.
Public or nonprofit ownership doesn’t remove those challenges. It only changes the priorities. Profit may not be the goal—but solvency is still essential. As one food policy analyst put it: “You can’t build equity on empty shelves.”
The Case for Investment
Despite the risks, many argue the benefits of public grocery stores outweigh the costs. The returns may not show up in balance sheets, but in reduced health care spending, increased employment, better school performance, and stronger local economies.
Public stores can act as anchor tenants, revitalizing commercial corridors and attracting additional services like clinics, pharmacies, or credit unions. They can train and employ local residents at living wages. And they can reinvest revenue into community priorities.
As Mamdani frames it: “We’re not just opening stores. We’re opening a future where no New Yorker has to choose between dinner and dignity.”
A New Chapter in Food Access
The feasibility of publicly operated grocery stores isn’t a yes-or-no question. It’s a matter of design, context, and political will. Done poorly, they risk inefficiency and failure. Done well, they can transform food systems.
What’s clear is that the private market alone will not solve food apartheid. After decades of disinvestment and unmet promises, communities are demanding something different. Whether through municipal markets, nonprofits, or co-ops, the movement is growing. And it’s not just about access. It’s about what kind of food system we want—and who it serves.
If cities like New York and Chicago can make public groceries work, they may set a new precedent: that good food is not a luxury, but a right. And that sometimes, the best way to feed the people—is to own the store.
Steven Hoffman is Managing Director of Compass Natural Marketing, a strategic communications and brand development agency serving the natural and organic products industry. Learn more at www.compassnatural.com.