The news: Procter & Gamble is hedging its bets as it grapples with higher costs related to tariffs and “stressed” consumers. The consumer packaged goods (CPG) company expects organic growth between 0% and 4% this year—a notably wider range than it usually forecasts, underscoring the uncertainty it (along with the rest of the CPG and retail industries) faces.

• The top end of P&G’s growth forecast is significantly higher than the 2% organic growth it reported for the fiscal year ended June 30—and also above the 2.6% consensus estimate.
• At least some of that growth will come from price hikes. P&G plans to raise prices by mid-single-digit percentages on a quarter of its assortment in Q1, partly to offset $1 billion in tariff costs.

Warning signs: P&G’s broad assortment of household essentials gives it unique insight into how consumers are feeling—and from its perspective, the view isn’t great. “We really see that the consumer is under some level of stress,” CFO Andre Schulten said in a press briefing, which is causing them to take any means necessary to curb spending.

• Households are using up existing pantry inventories, delaying purchases, and visiting stores less often to minimize unnecessary or impulse purchases, Schulten noted.
• Shoppers are also being more selective in what they do buy, responding more to value in the form of promotions and larger pack sizes.

And it’s not just lower-income consumers who are feeling the strain: Shoppers on “both ends of the spectrum” are looking for value wherever possible in response to economic volatility, Schulten said. This is particularly troubling given that affluent households are largely responsible for the current resilience of the US economy.

The big picture: Ultimately, P&G’s broad sales outlook underlines how difficult it is to predict consumer behavior amid rapidly fluctuating trade policies, geopolitical conflicts, and other concerns about the health of the economy.

There are some indications that consumer confidence is recovering. Sentiment in July ticked up according to both the Conference Board and University of Michigan’s Survey of Consumers. A spate of recent trade agreements with major partners like the EU and Japan could also help ease anxieties over rising prices and economic instability.

But consumers have yet to feel the full force of tariffs. Most costs have been shouldered by companies thus far—but as P&G’s pricing announcement made clear, that dynamic is changing quickly as businesses take action to cover their ballooning expenses.

• While all sectors are vulnerable to tariffs, consumers are likely to feel the biggest impact in the grocery aisle. Roughly three-quarters of food imports are subject to duties of at least 10%, while P&G and other CPGs are reliant on materials from China.
• 71% of consumers expect tariffs to make their financial situation slightly or much worse over the next six months, according to a May RetailMeNot survey shared with Chain Store Age.

Our take: Uncertainty is the byword for this year. While consumer sentiment is recovering, financial pressures, particularly on low-income households, remain—and are likely to intensify as tariffs boost inflation and the “Big Beautiful Bill” curbs buying power.

Regardless of which way sentiment is headed, there is no question that tariffs are reshaping consumers’ purchasing decisions. While P&G is betting that shoppers will be happy to pay more for products that deliver superior results, it is also acutely aware that cost concerns could boost the appeal of cheaper brands, especially once prices start to rise.