From milk to meals out: Consumers face rising costs amid trade uncertainty

June represented another month of strain for consumers as prices increased further from May.

Amid the imminent threat of US imposed tariffs, the prices of necessities such as groceries and food items continued to increase. Unless the European Union strikes a trade deal with the US, we could be facing double digit price increases on dairy commodities such as milk, butter and cheese. The prices of discretionary items, such as alcohol and tobacco, also experienced noteworthy increases, primarily due to manufacturing costs and excise duties.

The prices of luxury retail items such as clothes and miscellaneous items decreased, indicating prioritisation from consumers. We may continue to see a decline in demand and further stabilisation in this area.

Energy prices broadly remained consistent, with a decrease in fuels. However, much of this is likely down to the warm summer we are experiencing. Consumers are unlikely to feel the pinch of recently implemented carbon taxes until the colder autumn and winter months settle in. In contrast, prices across the hospitality industry rose in part due to the continued spell of good weather, but mainly down to the increase in seasonal demand that traditionally accompanies the summer holidays.

Prices in this area may stabilise later in the year as consumers look to save money and redirect spending to essential goods and services and inbound tourism declines during the off season.