Overall U.S. retail and grocery sales fell slightly month-over-month in February as consumer concern about tariffs and food inflation tightened spending, but despite the drop sales still increased year-over-year, according to new data.
Sales at grocery and beverage stores fell 0.07 percent from January to February, but soared 4.08 percent year over year unadjusted, according to the National Retail Federation’s CNBC/NRF Retail Monitor. Total retail sales, excluding automobiles and gasoline, also declined 0.22 percent seasonally adjusted in February, but inclined 3.38 percent unadjusted year over year.
“Consumer spending dipped slightly again in February due to the combination of harsh winter weather and declining consumer confidence driven by tariffs, concerns about rising unemployment and policy uncertainty,” NRF President and CEO Matthew Shay said.
Unease about the probability of inflation and paying higher prices for non-discretionary goods has the value-conscious consumer spending less and saving more, he said.
However, year-over-year retail sales gains reflect an economy with strong fundamentals, Shay said.
The NRF said the February downturn came after President Donald Trump announced 10 percent tariffs on goods from China, and 25 percent tariffs on goods from Canada and Mexico in early February. The Canada-Mexico tariffs were immediately delayed by a month, then delayed again for most goods until 2 April last week. However, tariffs on China were doubled to 20 percent – meaning certain goods from China are now subject to a 45 percent tariff rate.
Notably, 54 percent of grocery shoppers surveyed by FMI – The Food Industry Association said that tariffs were the top concern in March versus 49 percent in January, FMI Vice President of Tax, Trade, Sustainability and Policy Development Andy Harig said during a webinar last week.
Overall, 56 percent of grocery shoppers had positive expectations for 2025 in January, but that number dropped to 45 percent when shoppers were surveyed between 27 February and 3 March, Harig said.
In a separate Numerator survey, 64 percent of Americans said they were worried about tariffs raising the price of everyday goods, while 44 percent are worried about the limited availability of certain products, and 25 percent are worried about a potential slowdown in economic growth.
Shoppers are mostly worried about tariff-related price increases in essential categories, such as groceries, with 55 percent of those surveyed mentioning concerns. Consumers were also concerned about a number of other goods including gasoline (41 percent), household goods (34 percent), and medical supplies (29 percent), Numerator found.
In addition to tariffs, 71 percent of shoppers said they were concerned about rising grocery prices in March versus 68 percent in January, according to FMI.
Adding to food-based concerns, 51 percent said bird flu is their top concern in March, versus 43 percent in January. Grocery inflation has recently primarily been driven by egg prices, and consumers seem to understand that, according to Harig. Egg prices soared 36.8 percent in 2024, the “highest I’ve ever seen,” Dr. Ricky Volpe, associate professor of agribusiness at Cal Poly, said during the FMI webinar.
Fish and seafood prices, on the other hand, were down 0.7 percent in 2024 compared to 2023, according to U.S. Bureau of Labor Statistics Consumer Price Index data, Volpe noted.
The good news for seafood suppliers and consumers is that food at home inflation is increasing slower than overall inflation, according to Harig, which should encourage shoppers to cook at home more.
“Cooking at home is the most affordable option,” Volpe added, noting that restaurant prices are increasing faster than food-at-home prices.
Already, one in five Americans are stockpiling and spending more on groceries than they would typically because of the concerns related to tariffs, per creditcards.com.
Despite their concerns about tariffs and food prices, shoppers remain optimistic and resilient, according to Harig and FMI research. Nearly 80 percent say they feel in control of their household expenditures on groceries, and a majority, or 77 percent of consumers, said they expect their finances to be better or the same one year from now.
“This is definitely an uncertain time. Both consumers and the food industry have to remain flexible and nimble in order to adapt to this in real time,” Harig said. “Shoppers are and continue to be very resilient …[and] very sophisticated. They are much more in tune with current events than people recognize.”
