Shoppers Strategize As Grocery Prices Keep Rising

Rising grocery prices apparently haven’t peaked just yet. Several new studies show inflation at the grocery store is getting worse – and shoppers are having to come up with new ways to save to avoid busting their budgets.

The newest Consumer Price Index report from the U.S. Bureau of Labor Statistics shows that grocery prices last month rose 11.9% over the same time last year, the largest 12-month increase in more than 40 years. As bad as that is, the findings of two retail-related firms that compiled their own reports indicate that the situation could be even more dire.

Fetch Rewards has introduced a new monthly Fetch Price Index report, which it says can more accurately gauge inflation rates on the products shoppers actually buy. Using data based on actual purchases made by users of its rewards app, Fetch concluded that “consumer prices for food, personal care, and household items are up 13.9% compared to a year ago.”

In response to these higher prices, Fetch found that shoppers are shopping more frequently, but buying less. The average number of products purchased per household has dropped nearly 10% since this time last year, while the number of shopping trips per household actually rose slightly. That could suggest that more shoppers are not stocking up, but keeping their out-of-pocket costs down by purchasing only what they need when they need it.

The market research firm Numerator, meanwhile, has released its own findings. It pegs the grocery inflation rate at 14.6%, up two-and-a-half points from the previous month. That represents the steepest increase since Numerator began tracking inflation last year. Prices for nonfood household items are also reaching new highs, while prices of health and beauty items appear to be plateauing.

Consistent with its last report last month, Numerator found that club stores like Costco and Sam’s Club saw the lowest rate of inflation last month, while inflation continues to be most pronounced in dollar stores and when buying groceries online. Dollar store prices are up 22.5% year-over-year, while online grocery prices rose 19.5% (though again, just like last month, a Numerator spokesman did not respond to a request for comment about how and whether Dollar Tree’s 25% price hike late last year, from $1 to $1.25 for most items, factored into calculating the overall dollar store inflation rate).

A separate report from The Feedback Group took a closer look at how shoppers are responding to these higher prices. A survey of grocery shoppers found that nearly half are seeking out stores with lower prices, while 43% are buying more items on sale. Other money-saving strategies include buying more store brands, cited by a third of survey respondents, while about one-quarter are buying in bulk, cutting back on impulse purchases or planning their shopping list based on a store’s weekly sales circular.

Shoppers told The Feedback Group they are most interested in seeing prices come down on fresh foods. When asked “what is the ONE item on which you’d like supermarkets to lower the price if they could?”, 42% said meat. Dairy was next, with milk mentioned most, followed by produce.

One of the more interesting findings involved shoppers’ perspectives of how profitable grocery stores are. Some have accused retailers and manufacturers of taking advantage of the current economic climate, using it as an excuse to keep prices high and rake in record profits. The Feedback Group found that shoppers pegged the average supermarket profit margin at 33% – when, in reality, it’s between 1 and 3%.

“This inflated view of profits certainly leads some shoppers to think that food stores simply aren’t doing enough to keep prices down,” The Feedback Group Chief Listening Officer Doug Madenberg said in a statement.

Short of hoping that stores will start lowering their prices, then, shoppers are having to seek out their own ways to save. “Inflation is having a huge impact across the board, and we’re starting to see changes in consumer demand and purchasing behavior,” Fetch Rewards CEO Wes Schroll said in a statement. “As inflation puts pressure on household budgets,” Numerator CEO Eric Belcher added, “consumers are changing behaviors by the day.”

So if you haven’t settled on a grocery savings strategy yet, now would be a good time – as these reports indicate that grocery prices may not be coming down any time soon.

Image source: F Delventhal