IGA | Insights

"It’s the price of groceries, Stupid."

Written by John Ross | Mar 12, 2025 7:58:49 PM

Famously, Bill Clinton's presidential campaign used the phrase, “It’s the economy, Stupid” as a point of focus for Bill Clinton when he ran for his first term in office. Meant to ensure the campaign didn’t get distracted from the key message, the polls and market research clearly showed that the number one issue facing voters in that election was the economy.

Fast forward to 2024, and again the number one issue to voters was the economy — specifically, food inflation. Amongst voters who chose Biden in the 2020 election, more than any other issue, the price of groceries made them vote for Trump in 2024. In December, Donald Trump said the price of groceries won him the election.

For those of us in the grocery industry, it should be a wake-up call. Never in the history of the modern presidential system in the United States has our industry been so influential in the outcome of politics.

That’s really a call to look inwardly — high prices on feeding people’s families are a national problem to solve. And solving makes the solution-drive heroic. That could be us.

But unfortunately, it looks like things are going the other way. Today, total promotion counts (the number of items sold on discount nationally) are still down versus 2019, though radically better than it was over the last four years*.

Independent grocers’ net income was down last year, which means family-owned businesses were not passing on all the cost increases they were getting from suppliers to shoppers. That makes our family-owned businesses one of the big unsung heroes in the last few years.

As any grocer will tell you, shoppers blame the people they see day to day for high prices. It’s hard to stand on a retail floor day after day explaining why the price of CPG products continues to rise — or talk to shoppers about the impact of the avian flu when they are angered about the price of eggs.

And now come three new administration policies that have me worried.

Tariffs

First is tariffs. A 25% tariff is a tax on the American people, not international suppliers. Sure, in the long run tariffs might encourage U.S. producers to sell more and disadvantage international growers and suppliers, but in the short run all it will do is raise grocery prices. Over 60% of produce sold in the U.S. comes from south of our border. From produce to coffee to paper products, tariffs on Canadian and Mexican products will be an immediate price hike to U.S. shoppers.

Migrant Workers

Second is a crack down on migrant workers. U.S. farmers may have voted for Donald Trump, but many will quietly be asking him to leave their fields, processing plants, and slaughterhouses alone. The low cost of produce and animal protein in the U.S., compared to almost every other country in the world, relies on that labor. No matter what your stand on immigration (and I stand for a workable program to allow for legal and controlled immigration), a crackdown on farm labor will likely send produce and meat yields lower; and that means higher prices.

SNAP Cuts

Third is a growing concern over massive cuts to SNAP. The supplemental nutrition program looks like an entitlement program to lots of conservatives, but we grocers know better. The families on SNAP are elderly, disabled, or two-income working families who can’t make ends meet. Over 42 million Americans (12.6% of the U.S. population) receive supplemental nutrition subsidies. Even a 20% cut could be a $18+ billion cut to grocery spending.

It is hard to imagine that shoppers paying more for literally everything – fuel, housing, education, medical care, transportation – will suddenly find money to keep purchasing groceries at the same rate.

Which means they will default to other, cheaper options: fast food, convenience stores, low quality/high fat/high cholesterol substitutes that, over a long time, drive higher and higher medical costs. Instead of fresh and healthy food from a grocery store, they head to dollar stores, gas station, and quick-service restaurants for fried food. Who thinks this is a good option?

So, my message for the new administration is this: DON’T BLOW IT. With all three branches of government, you have a real opportunity to get legislation passed, fulfill your promises, and make our world great again.

Or you can ignore what got you into office. You can enact policies that make the cost of groceries rise instead of fall. And in so doing, hand the mid-term elections back to your opposition.

It’s all about the price of groceries. Don’t blow it.

*Source: NIQ, Retail Measurement Services; Total US xAOC; Annual trends