New York Fed research finds tariff increases take about a year to reach shop prices

Economists at the Federal Reserve Bank of New York published results from a new research paper estimating the effect of tariffs imposed since 2025 on retail consumer prices⁴. For every percentage point increase in average tariffs, consumer goods prices rise by about a quarter of a percent after one year⁴. The report estimated that roughly one-quarter of a tariff increase is ultimately passed on to consumer goods prices³.

The paper also splits the channel. Roughly two-thirds of the effect arises because tariffs raise the prices of imported consumer goods⁴. The remaining third arises indirectly: tariffs increase the prices of goods made in the United States because producers pay more for imported parts and materials, and because producers raise their markups⁴. The Washington Post reported the study’s estimate that tariffs drove up consumer goods inflation by about 2.9 percentage points as of February².

Why it matters to investors

Tariff inflation has a long tail¹. If pass-through is slow rather than absent, then consumer prices still have tariff-driven increases ahead even in categories where the duties have already been in force for months^1,3. That changes how a soft inflation print should be read: the absence of an immediate jump is not evidence the tariff effect has been avoided^1,4.

It also changes the arithmetic for central bankers. A quarter of the tariff increase arriving over a year, rather than all of it at once, spreads the price impulse across several quarters of data^3,4. Axios published the research alongside a chart of consumer goods price inflation running from 2022, placing the tariff effect against the post-pandemic baseline¹.

What to watch

The research sits in an established literature, with the authors citing earlier work from 2021 and 2025 on how tariffs affect consumer prices⁴. That lineage matters because it means the new estimates can be compared with prior rounds rather than treated as a first attempt⁴.

Specific categories show the mechanism at work. Tariffs are raising the prices Americans pay for wheelchairs, and days before the 145 percent tariff on Chinese goods took effect, ten healthcare organisations signed a letter to the US Trade Representative, Jamieson Greer, warning about the consequences^5,6. The same reporting noted that in July 2025 Trump signed the One Big Beautiful Bill Act, which cut $1 trillion in funding from Medicaid over a decade⁵. For investors, the test is whether consumer goods inflation keeps drifting up on the schedule the New York Fed describes^1,2,3.