Inflation cools down before trade talks heat up

A Yale University analysis concluded that the tariffs announced since President Donald Trump took office could cost the average household $3,800 a year.

There are so many moving parts between world economies, and everything is happening so quickly that it can be hard for families to settle on a financial plan if and when the president’s proposed reciprocal tariffs are implemented.

“I did have four kids that I raised, and I know what the cost of living is in terms of having a family,” retired high school teacher Ted Tibbs said as he vacuumed his car at a San Diego carwash.

He claimed that he figured out a long time ago how to enjoy living in San Diego while staying within his means. It is that experience, he added, that has him getting ahead of the higher prices he expects to pay due to the tariffs the U.S. has threatened to impose in 90 days on pretty much the world.

“If you have a 40% tariff, it’s going to have to come from somewhere,” he said. “Those of us living modestly and want to have some money that we can go and do other things with, we may not have that money as much as we had before.”

“People need to be prepared for an increase in the cost of living,” said Dr. Hisham Foad, an economics professor at San Diego State University.

They’ll have 90 days to do so — at least for now.

The professor said Tibbs' looking-ahead strategy is a good one for everyone, especially those working on tight budgets.

“Unfortunately, with tariffs, we tend to see that the people that are most affected are the ones that are least able to deal with it,” Foad said.

Foad explained that this is because families living paycheck to paycheck generally spend a bigger percentage of their income at the grocery store. Price hikes here will come in faster than anywhere else should Trump impose the tariffs in three months.

At least now they'll have a bit of breathing room and time to prepare, thanks to the pause on the reciprocal tariffs.

Here is what to watch:

Groceries

Bananas and other tropical fruits will likely be pricier. As will coffee, chocolate, vanilla, seafood, alcohol, jasmine rice, cheese, some nuts and olive oil.

Non-food products

Families will pay more for diapers, lotion, shampoo and toilet paper because of the imported materials they’re made of and the palm oil they use.

Clothing

Sneakers and other types of shoes will also see a price increase. Less expensive brands of clothing manufactured overseas will not be as affordable.

Pricier items

Cars and auto parts, furniture and electronics are likely to go up but not as quickly due to existing inventory. But it’s coming, says Foad, especially when it comes to smartphones and the trouble still brewing with China.

“There’s no locally made product right now that you can switch to, so consumers are going to pay most of that price," Foad said.

Foad explained that shifting the manufacturing of some of these products to the U.S. won’t be easy and will likely cost consumers more.

“Maybe it’s OK for consumers to pay a little bit more in return for having locally produced goods. The question is, is this the right way to go about promoting job growth in the U.S.? Especially given that the people who are paying for that job growth are the ones who are at the bottom of the income distribution," Foad said.

Foad said he’s hopeful countries will be able to work something out with the U.S. and keep prices where they are. However, should the trade war continue, make sure to keep an eye out on the cost of some of these products.

Speaking of keeping an eye out for consumers. The latest inflation numbers were published on Thursday.

Price hikes cooled in March, but the numbers came in before Trump doubled down on tariffs. The average cost of groceries went up 3.7% in a month at a higher rate than the national average of 2.4%. Experts worry what the trade negotiations we've seen in the last weeks might do to these prices.

On the flip side, there is quite a bit of relief when buying clothes compared to the average last month (-3.7 %) and last year (-4.0%). We'll see how these prices hold in the next few weeks as consumers may see a bump in the price tag of foreign-made apparel while the U.S. continues its trade talks with other countries.

Drivers have seen a steady increase over the last month in how much they pay to fill their gas tanks. A 0.17-cent per gallon more in San Diego County.

"With renewed refinery issues on the West Coast, gas prices there are likely to jump 10 to 35 cents per gallon over the next couple weeks," Patrick De Haan said at the beginning of April. He is the head of petroleum analysis at GasBuddy, which provides real-time gas price information from more than 150,000 stations.

However, drivers will be happy to know they're paying nowhere close to the average they paid a year ago at $5.33 a gallon.