When you use a taller tire it throws the speedo off a bit showing lower mileage. I think taller tires may help on the highway some but hurt in the city.
That is part of it.
You are going faster now, which increases air resistance.
You are going farther than the odometer says, thus mpg "seems" lower.
Probably uses more fuel to get moving since effective gearing has changed, but it would be offset by better hiway economy from that new effective gearing.
Your city vs. Hiway ratio determines the net effect based on your driving.
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