Retail Prices Were Heading in the Right Direction—Then Tariffs Hit | Working Knowledge

Research by Harvard Business School Professor Alberto Cavallo illustrates the downward trend in the price levels for many retail goods, followed by an acceleration after tariff announcements. Prices on both imported and domestic goods have climbed modestly but steadily since March, even if the hike is still small relative to the size of the tariffs.

The researchers created indexes with daily prices collected by PriceStats, a private firm cofounded by Cavallo that provides online data for over 350,000 products sold by five major US retailers. The indexes allow them to track price changes in specific categories and from countries of origin. Overall, the prices of imported products have increased faster than those made in the US. An extended analysis, going back to January 2024, explores price changes of goods relative to their pre-tariff trend.