Stock prices are booming, the job market is strong and inflation is falling in the U.S. But consumer confidence remains historically low. Dion Rabouin explains why Americans might not be feeling all that confident. (Victor J. Blue/Bloomberg News)
After a tactical pause during the holiday shopping frenzy, U.S. companies are unleashing a fresh wave of price increases in early 2026, with hikes often exceeding typical January adjustments amid persistent tariffs, soaring labor expenses, and supply chain pressures. From apparel giants like Levi Strauss & Co. to spice purveyors McCormick & Co., firms are passing on costs to consumers, signaling a potential end to the brief reprieve that lured bargain-hunters last fall. Economists warn these “stronger-than-normal” escalations—particularly in electronics, appliances, and durable goods—could fuel inflation concerns while testing shopper tolerance in a post-pandemic economy still grappling with wage stagnation for many.
The shift marks a reversal from late 2025, when retailers and manufacturers held steady on pricing or even discounted to capture holiday demand, fearing a consumer pullback amid economic uncertainty. Now, with the festive dust settled, companies are recalibrating. Harvard Business School professor Alberto Cavallo’s daily online price tracking through February 10 shows a 2.3% uptick in costs for the most affordable imported goods since November’s lows. The Adobe Digital Price Index echoed this, reporting January’s largest monthly online price surge in 12 years, propelled by electronics (up 4.1%), computers (3.8%), appliances (3.2%), and furniture (2.9%).
Levi Strauss exemplifies the trend. The denim icon implemented tariff-driven increases last month and is layering on more this February. Women’s ribcage straight ankle jeans now retail for $108, a $10 jump, while men’s original fit jeans climbed $5 to $84.50. “We’re strategically raising prices on newer, premium items while moderating hikes on entry-level products,” a Levi spokesperson said, noting efforts to offset duties on imported fabrics and components. The company’s shares (LEVI) dipped 1.2% to $22.45 in after-hours trading Wednesday, reflecting investor jitters over potential sales erosion, though year-to-date gains stand at 8% amid robust denim demand.
McCormick & Co., the Maryland-based spice leader, is similarly surgical. After absorbing $70 million in tariff hits last year—with another $70 million projected for 2026—the firm bumped select prices in September and again this month, targeting commodities like black pepper and cinnamon amid packaging inflation. “Our actions are targeted to cover unavoidable costs without broad impacts,” CEO Brendan Foley told analysts in a January earnings call. McCormick’s stock (MKC) rose 0.8% to $78.12 Thursday, buoyed by a 5% revenue beat in Q4 2025, but analysts at JPMorgan warn of “margin compression” if spice demand softens.
Outdoor apparel maker Columbia Sportswear Co. is hiking spring and fall lines by high single digits on average, after largely sparing autumn/winter collections. CEO Tim Boyle, in a February earnings discussion, framed it as a tariff offset, combined with factory renegotiations and internal efficiencies. “Our goal is dollar-for-dollar mitigation,” he said. Columbia’s shares (COLM) fell 2.1% to $82.34 midweek, part of a broader apparel sector retreat as UBS economist Alan Detmeister flagged “elevated January hikes” in durables, up 3-5% versus the usual 1-2%.
Small businesses, with slimmer buffers, feel the pinch acutely. Cincinnati’s Structural Systems Repair Group (SSRG) is imposing 10-15% contract increases this year, driven by 10% steel tariff spikes and matching healthcare jumps for its 115 employees. “We can’t sustain that without customer concessions,” President Bryan Erickson told reporters. Brooklyn’s Sin housewares firm archived a $450 ceramic planter, deeming it unviable at higher prices, and applied across-the-board hikes due to 20% wage growth since 2022 alongside shipping and materials inflation. Grand Rapids’ Atomic Object upped consulting rates to $200/hour from $195, citing 14% health premium surges equaling 10% of revenue.
The Vistage Worldwide survey of 600 small-business leaders in December revealed over half planning 4-10% hikes in the next quarter, with 10% eyeing double digits—far above norms. Larger firms like Stanley Black & Decker Inc., stung by sales drops after last year’s high-single-digit increases, are now mulling selective discounts, CFO Patrick Hallinan disclosed.
Market implications loom large. The S&P 500 Consumer Discretionary Index slipped 0.7% Thursday to 1,456.23, while the Producer Price Index for final demand rose 0.3% in January, per Labor Department data, hinting at pass-through inflation. Cavallo’s research suggests a “post-holiday reset,” with prices stabilizing by March if demand holds. Yet, risks abound: Higher costs could crimp sales volumes, especially for budget items, as seen in Stanley’s U.S. retreat. Broader economic headwinds—tariff uncertainties under the Trump administration and wage pressures amid 3.8% unemployment—amplify the squeeze.
As companies balance cost absorption with profit preservation, consumers may vote with their wallets. “This isn’t just tariffs; it’s a confluence of labor, health, and global supply strains,” Detmeister noted. Whether these hikes stick or spark backlash will shape 2026’s retail landscape.
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