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Grocery prices jumped in August. But tariffs aren't to blame.

Instead, it’s labor costs and the weather.

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Small profit margins for grocery stores mean they can’t absorb higher costs, which leaves consumers in a tough spot.
Small profit margins for grocery stores mean they can’t absorb higher costs, which leaves consumers in a tough spot.
Joe Raedle/Getty Images

The consumer price index for August, released Thursday, tells us that the price of food at home — stuff you buy at the grocery store and cook up yourself — was up 0.6% over the prior month. That's the biggest jump in more than three years.

If you’re wondering if tariffs are to blame, they’re not the main driver of higher grocery prices, according to Bobby Gibbs, a retail consultant at Oliver Wyman. He said other input costs are the culprits.

“Including, you know, weather and other production impacts,” Gibbs said. “Some of that comes from labor shortages and labor availability, which is a potentially kind of ongoing cost impact to them.”

Small profit margins for grocery stores mean they can’t absorb higher costs, he added. And that leaves consumers in a tough spot, per Charlotte Ambrozek, an assistant professor in the department of applied economics at the University of Minnesota.

Demand for some staples, like meat, is inelastic. So, when prices go up, ”people will probably just be stuck paying higher prices and compensating for that in other ways in their budget,” she said. “Fruits and vegetables might be slightly more elastic.”

That means consumers might buy less or swap them out for more affordable alternatives. That’s if they bother making a meal at all.

“When we see food away from home prices are not going up as fast as food at home prices, I think it's totally plausible that, you know, people will eat more meals, especially at fast casual or fast service restaurants,” said Ambrozek.

And that could save them the cost of the groceries, plus the time it takes to figure out what to make and actually cook it, she added.

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