Legislative Initiatives Mount to Lower Grocery Prices and Ban Surveillance Pricing
This article first appeared in Presence Marketing’s March 2026 newsletter.
By Steven Hoffman
As the food and beverage industry moves deeper into 2026, the narrative governing the grocery aisle has shifted from simple supply chain economics to a complex battlefield of technology, privacy, and political maneuvering. While headline inflation has ostensibly cooled from its post-pandemic peaks, the lived reality for the American consumer remains one of relentless sticker shock—a reality that is now precipitating a wave of legislative interventions at both the state and federal levels.
For retailers and manufacturers, the signal from Washington and state capitals is clear: the era of unrestrained pricing strategies may be drawing to a close. A bipartisan recognition of consumer distress is fueling a two-pronged legislative assault. On one flank, lawmakers are targeting the raw costs of goods through tax repeals and affordability agendas. On the other, they are taking aim at the very mechanisms of modern retail—specifically, the emerging use of artificial intelligence and data-driven "surveillance pricing."
The Economic Context: A Slowing Pace, But Rising Pain
To understand what’s driving the current legislative landscape, one must look at the data. According to NPR, grocery prices have surged between 30% and 40% since 2019, fundamentally altering the economics of the American household.
While the pace of increases is technically slowing, the trajectory remains upward. As reported by Progressive Grocer, the January Consumer Price Index (CPI) from the U.S. Bureau of Labor Statistics (BLS) showed a 0.2% rise in food-at-home prices for the month and a 2.1% increase over the last 12 months.
The pain is not distributed equally across the store. The data shows that five of the six major grocery store food group indexes increased yet again in January:
Cereals and bakery products rose 1.2%
Dairy and related products increased 0.8%
Meats, poultry, fish, and eggs inched up 0.2%
Both the nonalcoholic beverages and fruits and vegetables category saw a slight rise of 0.1%
Independent analysis paints an even starker picture. The ConsumerAffairs Datasembly Shopping Cart Index reported a nearly 6% year-over-year climb in January. The cost for their basket of everyday items jumped from $147.71 in January 2025 to $156.43 in January 2026. This $8.72 increase was driven largely by coffee, cereal, and paper products, though staples like eggs and butter offered modest relief.
The Drivers: Tariffs, Labor, and “Sentiment”
Industry analysts are quick to point out that these price hikes are not occurring in a vacuum. A complex web of federal policy decisions is actively influencing shelf prices.
Foremost among these are tariffs. A report from the Council on Foreign Relations highlights that 65% of Americans now view tariffs as a primary driver of unaffordability. The Yale Budget Lab estimates that recent trade policies will likely increase food prices by 1.4% in the short run. This is already visible in the coffee aisle, where prices soared after the Administration imposed tariffs as high as 50% on major importing countries like Brazil—a move Consumer Federation of America likens to a "$200 billion federal sales tax."
Furthermore, labor dynamics linked to immigration enforcement are creating disparities between retail and foodservice. Prices for "food away from home" rose significantly more (4.1%) in 2025 than "food at home" (2.4%), reflecting the higher proportion of labor costs in prepared foods.
However, Jayson Lusk, head of agricultural economics at Purdue University, notes a critical psychological component for the industry to consider. "Consumer anxiety is increasingly driven by food prices and tariffs, not inflation as a general economic concept," Lusk told the Council on Foreign Relations in February. It is this anxiety that politicians are rushing to assuage.
The New Target: “Surveillance Pricing”
Perhaps the most significant development for retail technology vendors and data analysts is the emergence of "surveillance pricing" as a legislative target. Surveillance pricing refers to the practice of using consumer data—purchase history, location, and even biometric data—to set personalized prices or fluctuate prices in real-time based on demand. As retailers invest millions in Electronic Shelf Labels (ESLs) and AI-driven dynamic pricing models to optimize margins, lawmakers are characterizing these tools as predatory.
Leading the charge against this practice is the Stop Price Gouging in Grocery Stores Act of 2026. Introduced in the Senate on February 12 by Jeff Merkley (D-OR) and Ben Ray Luján (D-N.M.), the bill explicitly bans corporations from "leveraging new technologies" to raise grocery prices. "The bill aims to prohibit retail food stores from price gouging and engaging in surveillance-based price setting practices," the Senators stated in a press release.
In the House, Rep. Rashida Tlaib (D-MI) introduced companion legislation, H.R. 4966, which targets "personalized price gouging" where she claims stores use consumers’ sensitive personal information against them to raise prices. “The majority of Americans are stressed about rising grocery prices,” said Rep. Tlaib. “While our neighbors struggle, corporate grocery chains are feeding customer data into algorithms to decide who can be charged more. Companies should not be allowed to use electronic labeling or your personal information to charge you a higher price. We need to ban corporate price gouging and surveillance pricing.”
The Union Push
This legislative push is being bolstered by organized labor. The United Food and Commercial Workers International Union (UFCW), representing 1.2 million workers, has launched the "Affordable Groceries and Good Jobs Campaign."
According to Store Brands, this national effort seeks to ban surveillance pricing and target the growth of AI-driven technology in grocery stores. The union argues that these technologies not only harm consumers but potentially devalue retail labor. For the industry, this signals a potential alignment between consumer advocacy groups and labor unions that could create a powerful lobbying block against retail automation.
The “Affordability Agenda” in Congress
Beyond the calls for specific bans on tech-enabled pricing, a broader "Affordability Agenda" is taking shape in the House, championed by the New Democrat Coalition, a group of of 115 House Democrats “who work across the aisle and across the Capitol to advance innovative, inclusive, and forward-looking policies.”
Congresswoman Janelle Bynum (D-OR), in collaboration with the New Democrat Coalition, recently unveiled a roadmap focusing on lowering five key costs, including household essentials like groceries. Similarly, Reps. Nikki Budzinski (D-IL) and Chrissy Houlahan (D-PA) published an opinion piece outlining plans to address these "core costs crushing working Americans."
"The American people need a real plan to make life more affordable," Budzinski and Houlahan wrote, criticizing any dismissals of affordability concerns.
This rhetoric is intensifying along partisan lines. Congresswoman Susie Lee (D-NV) on February 17 released a report utilizing House Budget Committee data to argue that the current administration's economic agenda is directly responsible for higher costs. "Families in Nevada were promised lower prices. Instead, President Trump and Republicans in Congress have delivered higher grocery bills," Lee stated in a press release, pointing specifically to tariffs as a crushing weight on working families.
Arizona Senator Mark Kelly, too, pressed the administration for more action on food costs. In a February 5 statement, Sen. Kelly called on the current administration to work with Congress to lower food prices. “Arizona families cannot continue to bear the cost of rising food prices. I encourage you to take swift action and work with us to lower the price of food for American families. Thank you for your attention to this urgent matter,” Kelly said.
State-Level Actions: Bans and Tax Cuts
While Washington debates, state legislatures are moving with speed. The approaches vary wildly depending on the political makeup of the state, presenting a patchwork compliance risk for national chains.
New York: Democrats have introduced two aggressive bills. The Protecting Consumers and Jobs from Discriminatory Pricing Act specifically targets grocery stores and pharmacies, prohibiting personalized algorithmic pricing and electronic digital shelving labels. A broader bill, the One Fair Price Act, would ban most businesses from using personal data to make prices fluctuate. As reported on February 11 by News10, these bills would empower the New York Attorney General to sue companies and, crucially, allow private citizens to sue when they believe they are victims of price discrimination.
Maryland: Similar momentum is building in Annapolis. Maryland Matters reported on January 20 that HB0148, which would prohibit the use of personal or biometric data in price setting, has already begun committee hearings. The bill, backed by Maryland Governor Wes Moore, targets the "customized prices" enabled by AI, despite objections from retail advocates who argue dynamic pricing can also benefit consumers through personalized discounts.
Tennessee & Missouri: In conservative-leaning states, the legislative weapon of choice is tax relief. In Tennessee, State Rep. Mike Sparks (R-Smyrna) filed the Fresh Food Affordability Act (House Bill 2086), which would eliminate the state sales tax on fresh fruits and vegetables. In Missouri, Senate Bill 1239, sponsored by Sen. Mary Elizabeth Coleman (R-Arnold), aims to end both state and local sales tax on food and grocery items. "I am looking to increase affordability for Missourians as prices rise," Coleman told the Columbia Missourian.
The Looming Data Void
Amidst this flurry of activity, a quiet bureaucratic decision may hamper the industry's ability to understand the full scope of the crisis. The Center on Budget and Policy Priorities (CBPP) reported in February that the USDA is ending its 30-year-old annual survey on food security, beginning with the cancellation of data collection for 2025.
This comes at a time when food insecurity remains stubbornly high—affecting 47.9 million people in 18.3 million U.S. households in 2024—and as SNAP benefits face historic cuts. The CBPP warns that "the absence of this data will make it harder for policymakers, researchers, and the public to measure the harm inflicted" by rising food costs.
Implications for the Industry
For the food and beverage sector, the message is multifaceted. The "tech-forward" future of retail—dynamic pricing, facial recognition, and hyper-personalization—is colliding with a populist backlash. Retailers investing in these technologies must now price in the risk of strict regulatory prohibitions.
Simultaneously, the foundational costs of doing business are shifting. Tariffs are raising input costs, while state-level tax repeals may offer some demand-side relief. As legislative initiatives mount, the industry must prepare for a year where the price on the shelf is determined as much by the statehouse as it is by the supply chain.
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.
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.