U.S. dollar's silent collapse is making everything cost more

08 May 2026, 14:33 · The Fresno Bee

The dollar's decline is no longer an abstract market story; it is showing up directly in everyday spending. Since early 2025, the currency has lost roughly 10% of its value against major global peers, reducing how much it can buy abroad.

The U.S. Dollar Index logged its steepest six-month drop in more than 50 years in the first half of 2025, and although the decline has since stabilized, the index remains about 10% below where it started Trump's term.

Import prices climbed 2.1% over the 12 months ending in March 2026, the largest year-over-year gain since December 2024, according to the Bureau of Labor Statistics. That increase is compounding alongside tariffs, elevated fuel costs tied to the Iran conflict, and persistent inflation that has already strained household budgets for years.

The dollar's 10% decline acts as an invisible surcharge on imported goods

"It's kind of a hidden tax," said Thomas Savidge, an economist at the American Institute for Economic Research, told the Associated Press ina May 2026 analysis. He further stated, "What your dollar is going to be able to buy is going to shrink."

The mechanics are not complicated, even if the consequences are far-reaching for your household budget and financial planning. When the dollar weakens against foreign currencies, every product priced in euros, yen, pesos, or Brazilian reais becomes more expensive to bring into the United States.

Coffee, travel, and fuel costs reveal the dollar's eroding value

Few products illustrate the real-world consequences of a sinking dollar more vividly than coffee, the beverage that fuels roughly 66% of American adults daily, according to the National Coffee Association.

Brazil supplies more coffee to the U.S. than any other country, and the dollar has fallen approximately 13% against the Brazilian real since early 2025. The average price for a pound of ground roast coffee reached $9.61 in March 2026, up from $9.46 the previous month, according to U.S. Bureau of Labor Statistics data.

"The dollar had been on a 15-year bull run...I would argue the dollar is still wildly overvalued, and over the next maybe five or six years, it might," said Kenneth Rogoff, Harvard University economist and former chief economist at the International Monetary Fund.

Overall, coffee prices have risen nearly 19% in the U.S. over the past year, with currency fluctuations adding pressure on top of supply chain disruptions. Travel costs are exposing the dollar's weakness in the most tangible way for Americans planning trips abroad this summer.

Crossing the border into Mexico, the top international destination for U.S. travelers, means your dollar buys about 16% less in pesos than it did at the beginning of 2025. Elsewhere, declines of 10% to 17% have been recorded against the euro, the Swiss franc, the South African rand, the Danish krone, and the Swedish krona.

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Multinational corporations win while small businesses absorb the pain

The dollar's decline has created a stark divide between companies that sell goods overseas and those that serve domestic customers while relying on imported materials. Multinational companies with significant overseas revenue have celebrated what executives describe as favorable currency tailwinds in recent earnings calls.

Elie Maalouf, CEO of InterContinental Hotels, acknowledged the dynamic during a February earnings call when the company reported higher profits and revenues, noting that the softer dollar had worked in the company's favor across its international operations.

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For businesses with global footprints and sophisticated currency hedging programs, the declining dollar is a tailwind that shows up directly in quarterly results. The picture looks far different for smaller, domestically focused companies that depend on imported supplies.

David Navazio, CEO of Pennsylvania-based Gentell, a medical supplies manufacturer with plants in Brazil, Paraguay, Canada, New Zealand, and the United Kingdom, said the dollar's decline has raised costs at each of those locations.

Gentell has been forced to raise prices to offset the currency hit, a burden that adds to tariff-related expenses and fuel cost spikes driven by the Iran conflict.

Harvard economist warns the dollar could fall another 15% over the next five years

Kenneth Rogoff, a Harvard University economist and former chief economist at the International Monetary Fund, told the AP that the greenback's slide was inevitable regardless of who occupied the White House.

The dollar had been riding a 15-year bull market, Rogoff noted, and the currency remains significantly overpriced relative to historical norms even after the recent pullback. He projected that the dollar could shed an additional 15% of its value over the next five to six years.

Morgan Stanley Research has reached a similar conclusion, estimating that the greenback could lose another 10% by the end of 2026, driven by narrowing interest-rate differentials between the U.S. and other major economies.

Foreign investors currently hold more than $30 trillion in U.S. assets, according to Morgan Stanley, and many have been adding currency hedges to protect against further depreciation, a trend that, in turn, puts downward pressure on the greenback.

What the dollar's trajectory means for your household budget going forward

The dollar's decline is feeding through the economy in uneven but persistent ways, raising costs that are not always easy to trace back to currency moves.

Imported goods, travel, and fuel are absorbing the most visible pressure, while domestic prices continue to adjust as businesses pass along higher input costs, according to Bureau of Labor Statistics import price data.

With economists at Morgan Stanley Research warning the dollar could weaken further through the first half of 2026, the effects described here are unlikely to fade quickly. Instead, the currency's slide is becoming a steady force shaping prices, corporate performance, and consumer purchasing power across the broader economy.

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This story was originally published May 8, 2026 at 7:33 AM.