Trump tariffs start pinching Americans: Food prices spike; fresh and dry vegetables 40% pricier in July

US President Donald Trump’s tariffs are finally pinching Americans as prices of everyday essentials have started rising.

As inflation reached new highs in July, food prices were up 2.9 per cent, with wholesale prices of fresh and dry vegetables up 40 per cent month-on-month.

Last month, the wholesale inflation reached a three-year high and retail inflation reached a six-month high.

The Producer Price Index (PPI), which measures wholesale inflation, rose 0.9 per cent month-on-month in July, compared to the 0.2 per cent increase that was forecast. The year-on-year increase was 3.3 per cent, which was a three-year-high.

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As the PPI tracks the change in prices for producers, it is an indicator of retail inflation in the coming months as producers largely pass on increased costs to consumers. At a time when the retail inflation, measured by Consumer Price Index (CPI), is already at a six-month high, the rising PPI suggests that Americans will continue to face price rises for the time being.

The data “points to pipeline inflation that’s likely to spill into consumer prices in the months ahead”, Michelle Green, a former Labor Department economist, told Axios.

Prices of food and everyday essentials expected to keep rising

Under Trump, prices for several foods are already on the rise.

The CPI data has shown that prices have increased by 5.8 per cent on meat, 3.1 per cent on poultry, 16.4 per cent on eggs, and 14.5 per cent on coffee.

As certain foodstuffs, such as coffee, are not grown in the United States, tariffs are bound to raise costs.

Foods are not the only essentials getting costlier. Prices for household electronics rose 5 per cent month-on-month in July and core inflation, which excludes prices for food and fuel, rose to 3.1 last month from 2.9 the previous month — well above the Federal Reserve’s preferred upper limit of 2 per cent.

As more and more tariffs kick in, prices are expected to keep rising. Moreover, there is evidence that sellers have not started passing on a greater burden of increased costs from tariffs onto consumers.

In the initial weeks of tariffs’ imposition, the rise in prices was subdued as previous inventory was being cleared and sellers were reluctant to pass on the increased cost to consumers, perhaps in the hope that tariffs would be short-lived. But that has now changed.

The share of tariffs that consumers ultimately pay has been rising over time, starting at only 22 per cent of tariffs’ costs and it is expected to rise to 67 per cent of increased costs by October, according to an analysis by Goldman Sachs published by The New York Times.