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.
Presence MarketWatch 2025
This article first appeared in the January 2025 issue of Presence Marketing’s newsletter.
By Steven Hoffman
With the Trump administration returning to the White House and the GOP controlling both the Senate and House of Representatives by narrow margins, the year 2025 is sure to bring significant change to regulatory policy, business and the economy, not just for the U.S. but also the world. To help leaders in the natural channel navigate the opportunities and challenges ahead, Presence Marketing will track and report on these issues over the course of the year ahead. Read on for a snapshot of some of the major issues that will impact the natural, organic and nutritional products market over the coming year.
Tariffs and Food Prices
President-elect Donald Trump ran on a campaign to lower grocery prices, which rose 23% since the onset of the Covid pandemic in Spring 2020. Food inflation has slowed over the past year, according to NBC News, and is now less than 2% as energy prices and supply chains have stabilized. Yet, experts caution that a combination of tariffs and mass deportations could have a further destabilizing effect on agriculture, food production and grocery prices. Trump has threatened to impose tariffs up to 60% on goods from China, and a 25% tariff on products from Mexico and Canada – all countries that are significant exporters of food and other products to the U.S. market.
In a Time Magazine interview in December 2024, Trump acknowledged it may be difficult to bring down grocery prices, saying, “Look, they got them up. I’d like to bring them down. It’s hard to bring things down once they’re up.” According to a study from the Peterson Institute for International Economics, Trump’s proposed tariffs on Mexico and Canada would have the biggest impact on prices for autos, vegetables, fuel, prepared food and animal products, reported CNN Business. The U.S. relies on Mexico for 89% of its imported avocados and 91% of foreign-grown tomatoes. “Higher tariffs on Mexico and Canada will … put upward pressure on U.S. food prices,” the Peterson Institute said. While it’s too soon to determine whether Trump will actually impose tariffs or if trade agreements can be reached to prevent them, “The only certainty is that new tariffs will be costly for the United States,” said the Peterson Institute study’s authors.
Food, Farm Workers and Mass Deportation
California’s Monterey County is the fourth-largest crop-producing county in the nation, with the agriculture industry there contributing $4.4 billion to the economy, and with an estimated 55,000 farm workers, including many who are undocumented. As such, the area’s growers have expressed concern that much of their workforce could disappear as a result of potential mass deportations once the Trump administration takes office. In an interview on Dec. 19, 2024, with NBC Bay Area News, Monterey County Farm Bureau CEO Norm Groot said, “It will absolutely impact food prices at the consumer level. If it impacts local and nationwide supplies, that will have a price increase.” NBC reported the farm bureau is teaming up with county officials and other stakeholders to create a task force in addressing local concerns around mass deportations, including concerns around family and child separation. "It's interesting that four years ago during the pandemic, they were essential," Groot said. "And now all of a sudden we’re looking at it from a different perspective and trying to understand how that dynamic has changed."
And it’s not just Monterey County – while it’s estimated that undocumented workers make up only 5% of the total U.S. workforce, the share of undocumented workers across the nation’s food supply chain is at least 16%, reported Successful Farming. In some industries this number is higher – the Idaho Dairymen’s Association estimated that nearly 90% of the state’s dairy workers were born outside of the U.S. According to a September 2024 study by the Peterson Institute, mass deportation could lead to a 10% increase in food prices. Between higher food prices that could come with proposed tariffs – and potential government bailouts funded by U.S. taxpayers to provide assistance to farmers affected by deportations – Americans could potentially get “double-whammied” by the higher costs and supply chain disruptions these proposed policies could bring.
RFK, FDA and the Nation’s Health
MAHA has become a rallying cry for many in the natural health and nutritional supplements industry as Congress weighs the nomination of Robert F. Kennedy, Jr. Kennedy, a lawyer, environmentalist and controversial health advocate, is Trump’s pick to lead the U.S. Department of Health and Human Services (HHS), a Cabinet-level position that oversees the U.S. Food and Drug Administration (FDA), Centers for Disease Control and Prevention (CDC), National Institutes of Health (NIH), and others.
On one hand, RFK’s team is weighing a rewrite to the FDA’s rules overseeing food additives and taking a hard look at the harmful chemicals and pesticides used in food production. On the other hand, RFK’s top lawyer Aaron Siri stirred controversy when it was reported in December 2024 by CNN and others that he had petitioned the FDA to revoke approval of the polio vaccine. The World Health Organization declared that polio was eradicated in 2019 but warned it could re-emerge if vaccination coverage declines. According to a Dec. 4, 2024, article in Forbes, Kennedy criticized the FDA in a post on X (formerly Twitter) for “suppressing” a wide range of items, including “psychedelics, peptides, stem cells, raw milk, hyperbaric therapies, chelating compounds, ivermectin, hydroxychloroquine, vitamins, clean foods, sunshine, exercise, nutraceuticals, and anything else that advances human health and can’t be patented by Pharma.”
Kennedy will have an ally in Martin Makary, M.D., a surgeon, public policy researcher at Johns Hopkins University and a member of the National Academy of Medicine, and President-elect Trump’s choice to serve as FDA Commissioner. In September 2024, Makary joined RFK at a round table in Congress on health and nutrition, where he criticized how food in the U.S. is grown and processed. "We have poisoned our food supply, engineered highly addictive chemicals that we put into our food. We spray it with pesticides that kill pests. What do you think they do to our gut lining in our microbiome?" Makary said. In related news, Trump’s pick for Surgeon General, Dr. Janette Nesheiwat, a family medicine doctor who runs a chain of urgent care clinics in New York, was a regular Fox News contributor and is an advocate for nutritional supplements, marketing her own brand of dietary supplements called BC Boost, containing vitamins C, B-12, D and Zinc.
Brooke Rollins Nominated to Lead USDA
President-elect Trump in November nominated Brooke Rollins, President and CEO of the America First Policy Institute, a conservative think tank based in Texas, to lead the U.S. Department of Agriculture. “As our next Secretary of Agriculture, Brooke will spearhead the effort to protect American farmers, who are truly the backbone of our country,” Trump said in a statement. Rollins is a graduate of Texas A&M University, with an undergraduate degree in agriculture development. “From her upbringing in the small and agriculture-centered town of Glen Rose, Texas, to her years of leadership involvement with Future Farmers of America and 4H, to her generational family farming background, to guiding her four kids in their show cattle careers, Brooke has a practitioner’s experience, along with deep policy credentials in both nonprofit and government leadership at the state and national levels,” the statement said.
“We congratulate Brooke Rollins on her nomination as Secretary of Agriculture. This is an important moment for U.S. agriculture, and we are optimistic about the opportunities her leadership will bring to rural America,” Amy France, chairwoman of the National Sorghum Producers in Scott City, KS, told Successful Farming. "Sorghum farmers are at the forefront of innovation, contributing to domestic biofuels and heart-healthy, nutritious, ancient grain foods. We are eager to work with her to advance policies that strengthen the sorghum industry and benefit growers nationwide.”
“The Department of Agriculture plays a pivotal role in safeguarding our food supply, addressing food insecurity, managing our forests, as well as supporting America’s farmers and rural communities who are on the frontlines of the climate crisis,” said Rebecca Riley, Managing Director, Food and Agriculture, for the Natural Resources Defense Council (NRDC). “Rollins needs to invest in America’s farmers – from small family farms to larger-scale operations – and to work toward a resilient and equitable food system that puts healthy food on the table, restores our soil, protects the climate, and safeguards the health of our communities … now is not the time to undermine climate-smart farming practices, favor industrial agriculture at the expense of small producers and consumers, or gut the nutrition programs that many Americans rely on,” Riley said.
California’s AB 660 Sets Landmark Food Date Labeling Standards
California Governor Gavin Newsom in September 2024 signed into law the nation's first mandatory food date labeling reform bill. California Assembly Bill 660 (AB 660) standardizes the use of “Best If Used By” and “Use By” dates on food labels, and prohibits the use of “Sell By” dates. The new law requires manufacturers to use the same phrase for date labels across their products, reported Food Safety. Beginning July 1, 2026, companies selling food products in California must only use “Best If Used By” to indicate the date by which a product will reach its peak quality, and “Use By” to indicate the date by which a product’s safety can no longer be guaranteed. The use of consumer-facing “Sell By” dates will be prohibited to reduce the chances of consumers confusing “Sell By” dates with quality or safety dates.
“On grocery store shelves today, there are more than 50 differently phrased date labels on packaged food. Some phrases are used to communicate peak freshness of a product or when a product is no longer safe to eat. Others, like ‘Sell By,’ are used only to inform stock rotation in stores but mislead some consumers into thinking the product is no longer safe to eat. AB 660 will close this gap by requiring manufacturers to use the same phrase for date labels across their products,” NRDC said in a statement.
Of course, as goes California, so goes the country. “AB 660 is game changing, not just for California, but for the country. It will be the first law of its kind to end the ridiculous confusion that causes consumers to throw out almost $15 billion of perfectly good food nationwide. It will also help reduce the significant toll that wasting food has on our planet,” Dana Gunders, President of reFED, told BioCycle Magazine. “Having to wonder whether our food is still good is an issue that we all have struggled with. Today’s signing of AB 660 is a monumental step to keep money in the pockets of consumers while helping the environment and the planet,” said Assemblymember Jacqui Irwin, author of the bill.
Steven Hoffman is Managing Director of Compass Natural, providing public relations, brand marketing, social media and strategic business development services to natural, organic, sustainable and hemp/CBD products businesses. Contact steve@compassnaturalmarketing.com.