More Price Increases Are Coming in 2026

What do Levi Strauss, spice-maker McCormick, BMW and Porsche, Cincinnati’s Structural Systems Repair Group and 16 major drug makers have in common? They’re all hiking prices to cope with pressure from tariffs or rising health insurance costs.

The Wall Street Journal has a good rundown of what’s coming: “After holding the line on prices for several months, companies – big and small – have begun a new round of increases, in some cases by high-single-digit percentage points.”

These, of course, are on top of the tariff-driven price hikes from last year, the Journal noted.

“High-single-digit” increases is interesting. The Consumer Price Index, a key measure of inflation, is based on a basket of goods. If enough businesses adopt price increases, we could see CPI rise.

Inflation has slowed from its peak of about 9% under President Joe Biden, but it’s not gone. CPI registered an annual gain of 2.7% in December and 2.4% in January, still above the Federal Reserve’s target of 2%.

The planned increases signal that, for many businesses, the phenomenon of suppressing prices ahead of Black Friday to avoid alienating customers appears to be done.

President Donald Trump has repeatedly said that foreign countries and businesses pay the tariffs. That’s not true, and it’s never been true, as shown again by new independent data.

Last week, the Federal Reserve Bank of New York released a report showing that American consumers and businesses paid nearly 90% of the cost of Trump’s tariffs through late 2025.

The nonpartisan Tax Foundation found the tariffs cost the average American household roughly $1,000 last year. If current policies remain in place, that is expected to rise to about $1,300 per household in 2026.

If the mild January CPI reading was good news for Republicans at the dawn of a midterm election year, news that businesses are implementing price increases is bad news. The cost of living continues to be the main issue on voters’ minds.

As many as 7 in 10 Americans rate the country’s economic situation as fair or poor, compared to 28% who say it is excellent or good.

That doesn’t automatically translate to a Democratic romp come November. But the party has done well in special elections over the last 12 months – including in some very pro-Trump areas.

By some measures, Trump’s economy is doing pretty well – it boasts low unemployment and a soaring stock market.

But we’ve been here before. Biden helped engineer the strongest economic recovery of any rich country in the world. Voters still punished Democrats.

Why? A July 2023 poll from the Economist/YouGov did us all the favor of asking Americans what they meant when they talked about “the economy.” Stocks? Just 6% pointed to Wall Street. Jobs? Fifteen percent. The top answer, at 57%? The price of goods and services.

The political challenge for Republicans is that disinflation (a slowing of the rate of price increases across the economy) is not the same as deflation (overall prices falling). Trump promised the latter. While some things are less expensive – eggs, for instance – prices in the main are higher now than when he took office.

Across-the-board deflation is highly unlikely to happen. It’s also not desirable in an economy powered by consumption: If you expect prices to be lower next month, you may put off major purchases, which would slow growth. So how can politicians find the right tone between empathy and overpromising? This year may hold the answer.