grocery store photo


Remember when grocery prices were low, sales were generous and coupon policies were much more relaxed? That all changed over the past several years, leaving shoppers to lament that coupons and sales just aren’t as good as they used to be. But now, grocers could be poised to launch a new battle for your business – and soon, we could all be shopping and couponing like it’s 2009 again.

Grocery prices have been on the decline all year, and retailers are increasingly concerned they could keep falling into the new year. Kroger this morning became the latest grocer to cut its sales and profit forecasts, blaming the industry’s “transition to a deflationary environment.”

That’s bad news for them, great news for grocery shoppers. It’s the longest stretch of food deflation in seven years. So retailers that are getting pinched by falling prices on staple items like milk, eggs and beef are increasingly trying to boost sales by ramping up the deals on everything else.

“The current landscape is now beginning to look a lot like 2009, when meaningful deflation resulted in an industry price war,” noted Credit Suisse analyst Edward Kelly in a research note this week. That price war, he noted, stretched well into 2010.

Already in recent months, Kroger has launched new rounds of price cuts in certain markets, Walmart lowered everyday prices as an alternative to ad matching in hundreds of stores, and Dollar General slashed prices on hundreds of its best-selling products.

“It’s in big categories for us, milk and eggs,” Dollar General CEO Todd Vasos told investors last month. “Also beyond that in dry grocery, we still see sugar, grains, cereals, coffee, some of our largest categories being affected by cost decreases, which then in turn become retail decreases.”


And as retailers fight for a bigger piece of a shrinking pie, lower everyday prices could lead to more sale prices, special deals and – who knows – maybe even a return of popular promotions that many have discontinued, like double and triple coupons.

Even without special sales and coupon deals, the everyday savings on many items are significant. According to the most recent figures available from the Bureau of Labor Statistics, overall food prices fell 1.6% between July of 2015 and July of 2016. The following products saw some of the largest price decreases:

Product Jul 2015 Jul 2016 % decline
Eggs/dozen $2.57 $1.55 -39.8%
Ground beef/lb $4.20 $3.69 -12.1%
Sweet peppers/lb $2.51 $2.22 -11.7%
Milk/whole gal. $3.43 $3.06 -10.7%
Navel oranges/lb $1.38 $1.26 -8.1%
Ground coffee/lb $4.79 $4.43 -7.6%


Not all prices are going down, however. While overall price increases were not as significant as the declines, they can still affect your grocery budget if you frequently buy items like these:

Product Jul 2015 Jul 2016 % rise
Grapefruit/lb $1.12 $1.28 14.6%
Rice/lb $0.67 $0.74 10%
Strawberries/pt $1.80 $1.94 8%
Flour/lb $0.52 $0.54 5.4%
Bacon/lb $5.18 $5.45 5.2%
Ice cream/half gal $4.47 $4.69 5%


The other problem with deflation, is that falling prices are often accompanied by falling wages. So saving some money on your grocery bill doesn’t necessarily make up for having fewer dollars to spend in the first place.

But when it comes to making ends meet in a still-challenging economy, lower prices and better deals at the grocery store certainly can’t hurt. So if a full-fledged price war really does occur, enjoy it – for as long as it lasts.

Photo by Jellaluna

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