🍌 Banana prices are going, well, you know
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Bananas are losing some, ahem, appeal. Prices for the ubiquitous yellow fruit are on the rise, even as inflation cools.
Why it matters: Tariff increases are starting to drive inflation for certain goods, and perishable items that can't be produced domestically are first in line.
- Enter the banana, described by Axios last year as "the fruit inflation forgot." It's been heretofore resistant to rising prices.
- That's due in part to free trade agreements, which are now a bit kaput thanks to the blanket 10% tariff imposed by the White House. (Coffee prices are also feeling tariff pain.)
By the numbers: Banana prices rose 3.3% in May from the previous month to 66 cents per pound, according to Consumer Price Index data out Wednesday.
- Inflation overall ticked up just 0.1% over the same time period.
Zoom in: Low labor costs also play a role, as does the banana's big weakness: It spoils quickly. That's good for banana bread, but bad for banana importers.
The intrigue: Growers have to move bananas quickly, but importers couldn't stockpile much inventory before tariffs took effect, as companies did for so many other products.
- Bananas aren't grown at scale in the U.S., as Rep. Madeleine Dean (D-Penn.) explained to Commerce Secretary Howard Lutnick at a recent hearing on Capitol Hill.
- Lutnick said that if companies build their products in the U.S. they won't face tariffs. Dean responded, "We cannot build bananas in America."
Yes, but: Even though prices have surged, bananas are still really cheap!
The bottom line: Lucille Bluth famously asked the question: "What could a banana cost?"
- Right now, even at this higher rate of price increases, we are still nowhere near her guess of $10.
