Can we add “inflation” to Lake Superior State University’s list of banished words for 2025?
More than just a buzz word, post-COVID inflation continued to impact consumers in 2024 along with still-high interest rates. With the election over and a new year looming in front of us all, the question, no doubt, on many minds is: Will things improve in 2025?
Time will tell, of course. But while we wait, experts are weighing in with their predictions. First, on the housing market.
5 Housing Market Predictions for 2025
The elephant in the room of the housing market is that other “I” word: interest. While interest rates did decline in 2024 — currently sitting at 6.7 percent compared to a peak of 7.8 percent in 2023 — that decline certainly didn’t feel like a win, nor did it offer much of a boost to home sales. According to Realtor.com, mortgage rates and home prices are the top factors on consumers’ minds. And in light of that, here are the real estate website’s predictions for 2025.
- Home prices will increase by 3.7 percent in 2025
- Mortgage rates will stay above 6 percent but lower to 6.2 percent by the end of 2025
- Rent will fall about 0.1 percent to stay roughly the same
- Single-family housing supply will continue to increase
- Home sales will rise by 1.5 percent
The Realtor.com home sales prediction is conservative, compared with a prediction of 10 percent made by Leo Pareja, CEO of real estate brokerage behemoth eXp.
What does this mean for the Independent channel?
Again, time will tell; however, an increase in home buying could trigger more home-related purchases across multiple categories including furniture, appliances and electronics.
Grocery Predictions for 2025
Homeowner or not, inflated food prices affected consumers across the country this past year. Walmart CEO Doug McMillon shared his 2025 predictions and insights for the grocery sector at a recent Morgan Stanley event. Here’s what McMillon had to say about current conditions and the upcoming year.
- In the beginning of 2025, food inflation will remain at current levels, though he is unsure what the rest of the year will look like.
- Currently, food-at-home prices are 25 percent higher than pre-COVID, per the Food Industry Association. In November, prices were up 1.1 percent year-over-year, with the biggest increases affecting meat, poultry, fish and eggs.
- Processed food likely will not go back to pre-pandemic levels and may not decrease much at all in 2025.
- In comparison, general merchandise has already gone down to pre-COVID levels — at least at Walmart.
What does this mean for the Independent channel?
Higher grocery bills leave less room for discretionary spending — and greater levels of duress in unexpected situations. Consumers who continue feeling pinched when paying for food may be more conservative going into the new year, unsure of what to expect.
Whether you await the new year with optimism, caution, or cautious optimism, we’ll all soon find out what happens to interest rates and inflation as we live it out in real time.
