As grocery prices rise, so does unemployment as Fed meets next week to discuss interest rates

PHILADELPHIA (WPVI) -- The cost of a daily coffee fix is rising, with experts reporting an average 20% increase compared to this time last year. Shoppers are feeling the pinch, not just in their cups but across grocery aisles.

"The prices are going up, the packaging is getting smaller," said Zara Brown of North Philadelphia.

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Another shopper agrees, "Things have shrunk in quantity, but the prices have increased."

In the Philadelphia region, grocery prices rose 2.4% over the past month, with meat prices jumping 4.7% in that timeframe.

Experts advise shoppers to be strategic.

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"Consumers have a lot of choice in this economy, which is a good thing. And so, I think that they need to look around," said Earnest Baskin, a professor specializing in food marketing at Saint Joseph's University.

But even as consumers compare prices, broader economic signals are raising concern.

"Now we might be seeing exactly what people have been warning about, which is that the economy is slowing down and that prices are possibly starting to rise again," said Erasmus Kersting, chair of the economics department at Villanova University.

Economists have been concerned about the impact of tariffs on both industry and consumers. As uncertainty grows, hiring has slowed. The national unemployment rate reached 4.3% last week, which was paired with the highest number of jobless claims since 2021.

"The unemployment data paints a not-so-great picture," Kersting said.

Attention now turns to the Federal Reserve, which is expected to announce its decision on interest rates next week.

"In terms of the overall impact on interest rates or the stock market, I think it will be quite subdued. I think it will be what people usually expect," Kersting added.

The general expectation is that the Fed will cut interest rates by a quarter of a percentage point.