Persistent Inflation Pressures in Grocery Store Aisles

To try to reduce costs, Kroger’s sourcing and supply-chain teams are examining the trucking routes for food manufacturers and other areas where expenses could be stripped out, McMullen said.

Persistent Inflation Pressures in Grocery Store Aisles
Prices have continued to rise fast for packaged food and other goods in the so-called center store. PHOTO: ASA FEATHERSTONE, IV FOR THE WALL STREET JOURNAL

Grocery Prices Rise Steadily, Particularly for Packaged Food and Household Goods

Inflation remains high in the central aisles of grocery stores, the areas known for packaged food and household goods, despite the overall easing of prices for products such as meat, eggs, and gas. According to NielsenIQ data, prices for items like potato chips and mayonnaise have increased by 17% and 23%, respectively, in comparison to the previous year. The persistent price hikes are affecting consumers' purchasing power and leading to a power struggle between retailers and consumer packaged goods producers. Even though the pace of food-price increases has slowed, the inflation rate for "dry grocery" is still high at 12%.

Consumers Turn to Cheaper Options, Businesses Resist Lowering Prices

The consistent price rise has led consumers to increasingly opt for cheaper versions of packaged groceries, while the cost for food companies has started to ease. Retail giants like Walmart and Amazon's Whole Foods have been pushing back on high prices from food manufacturers. Meanwhile, store brands are growing almost twice as fast as national brands in stores like Target. Despite these trends, some food manufacturers continue to defend their higher prices and are open to further increases, citing their own increased costs for labor, transportation, and ingredients.

Source: The Wall Street Journal

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