New York Fed estimates tariffs added 2.9 points to US inflation through February

Tariffs and fuel both feed into food prices. Economists told CBS News that food costs are rising partly because gas and diesel fuel farm equipment and ship goods to stores, and partly because of the administration's tariffs ^[4]. Consumer Price Index data show a 4% rise since November 2024 in what it costs to buy food prepared at home ^[5]. That came after a 23% jump in food prices over the previous four years ^[6]. Compounding the two CBS figures puts food roughly 28% above where it stood four years before November 2024 ^[18].

A supply shock that comes from policy ends when the policy changes. We do not know yet whether either of these policies will change before the vote ^[14]. "It's undeniable that several of these supply shocks that the U.S. economy has been navigating through come from policy decisions made by the administration," Greg Daco, chief economist at EY-Parthenon, told CBS News, naming the decisions to intervene in Iran and to impose tariffs ^[9].

The White House disputes that account. It says the president's agenda "stopped Biden's inflation crisis," and spokeswoman Taylor Rogers told CBS News that the administration's policies "will continue to deliver economic wins over the next two years" ^[10]. That claim runs on a two-year horizon. A quarterly cost budget closes long before it can be tested. Growth is solid and unemployment low, CBS reported ^[15], so the pressure on operators comes from costs. Demand is holding up.

Pricing is the other constraint. Ryan Bourne, an economist at the Cato Institute, said consumers "judge the prices they're paying against the prices they paid four or five years ago, and are still shocked by it" ^[11]. Daco said shoppers remember what they spent on groceries before the pandemic and get a jolt at each visit ^[16]. "The salience of prices is what is driving this downbeat consumer morale," he said ^[12].

This quarter's budget can go wrong in two ways. A plan that assumes costs persist, and then meets a policy reversal, has set prices or margins too cautiously for one quarter. A plan that assumes relief, and then meets continuation, hands next quarter a cost it never budgeted, at a moment when customers are primed to resist a price increase ^[11]. I think the second error is the costlier one this autumn. The near-term figures point the same way: the September forecast is 1.6 points above the Federal Reserve's 2% target ^{[8] [17]}.