Food retailers are concerned by a sharp decline in average SNAP benefits per participant. The USDA's efforts to combat fraud, waste, and abuse have led to elevated SNAP payment error rates. These rates are triggering a new fiscal conflict between the Trump administration and states. The national SNAP payment error rate for FY2025 is reported at 10.62%, with most states exceeding the 6% congressional threshold. Starting in October 2027, states above this threshold will face cost-sharing obligations for a percentage of their benefit costs. This looming cost shift, combined with a decrease in SNAP participants due to tighter work requirements, could lead to further benefit reductions or eligibility changes at the state level. Such actions would negatively impact food retailers, particularly those heavily reliant on SNAP spending. Value-focused retailers like Dollar General and major grocers such as Walmart and Kroger are among the most exposed. The Trump administration's focus on program integrity has resulted in a significant drop in SNAP enrollment. This trend poses an incremental headwind for the entire food retail sector.