Can Caithness Shops Survive Tariffs - Oh Yes

3rd April 2025

The impact of new international tariffs on shop prices isn't always immediate or uniform. It depends largely on a mix of factors, including the type of product, supply chain arrangements, and broader economic conditions.

Current Trends in Caithness
Recent regional data suggests that in Caithness, many shop prices have actually shown signs of deflation over the past few months. For instance, a recent report covering early August 2024 noted that non-food items experienced a slight deflation (around -0.3%), while food prices were relatively steadier, reflecting ongoing retailer discounting strategies and seasonal influences . This indicates that for some categories, local retailers are managing to keep costs down—even in a challenging economic climate.

Factors That Could Lead to Price Increases
Cost Pass-Through from Higher Import Prices: If the tariffs result in higher costs for imported goods or ingredients, suppliers may eventually pass these costs on to retailers. However, many local shops in rural areas like Caithness often source a significant portion of their products locally, which can mitigate the immediate impact. For imported goods—such as certain specialty foods or non-essential items—retailers might begin gradually increasing their prices if supplier costs rise.

Delayed Reaction in the Supply Chain
Even if tariffs raise costs upstream, there is often a lag before these costs affect retail prices. Retailers might absorb some of the initial increases to maintain customer loyalty or to avoid abrupt pricing changes. Typically, if cost pressures persist, prices might start to change anywhere from one to three quarters later, depending on how quickly suppliers adjust their pricing.

Sector-Specific Influences
Different product categories respond differently. Fresh food items, which rely on a combination of local production and imported inputs, might see milder adjustments as local sourcing buffers the shock. Conversely, products that are heavily dependent on imports or that have less competitive pressure may see more rapid price rises.

When Might We See a Change?
Predicting an exact timeline is challenging. In many cases, if overall cost pressures—from tariffs, higher energy costs, or supply chain disruptions—become more pronounced, retailers tend to re-evaluate their pricing strategies on a seasonal or quarterly basis. In the current environment, if tariffs significantly affect supplier prices over the next few months, it's possible that we may begin to see incremental retail price increases in certain product ranges within the next quarter. However, this could vary widely by product category and retailer strategy.

Don't Panic -Things will not change immediately
In summary, while some key products might eventually see price increases as tariff-induced cost pressures filter down the supply chain, many shops—especially in regions like Caithness that rely on local sourcing—may not experience drastic changes immediately. The adjustments, if they occur, are likely to be gradual and sector-specific, with noticeable changes possibly emerging over the next three to six months if the pressure remains sustained.