PepsiCo said sales of Frito-Lay snacks fell sharply in the latest quarter as consumers became more sensitive to rising prices.
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Justin Sullivan/Getty Images North America
Grocery prices are no longer rising as much as they have been for the past two years, but many Americans are still frustrated by the cost of putting food on the table.
Some people have clearly reached their limit. One of the largest snack manufacturers said this week that its sales fell this spring as grocery shoppers became more sensitive to rising prices.
Here are three things you need to know about today’s food prices, and why they still feel pricier at the checkout line at your favorite grocery store.
What happened to food prices?
It might not feel like it, but grocery prices have actually mostly leveled off.
The latest consumer inflation report released this week showed that grocery prices rose just over 1% over the past 12 months. That’s a big improvement from the year before, when prices rose nearly 5% and the year before that, when prices soared by double digits.
However, stabilizing prices does not equate to falling prices, and the cumulative effects of earlier price increases are still being felt in the United States.
That’s frustrating shoppers like Cindy Seinar, a retired autoworker in Lynchburg, Virginia.
“You go in and buy something, and when you come out it’s $45,” she said, describing her experience at the grocery store.
For Senna, like many other Americans, frustration is fueled by “deflationary inflation.” This is when companies shrink pack sizes, meaning you get less than before At the same price, sometimes even a higher price.
“It’s only 4 pounds of sugar,” Seinar said. “You can’t even buy a 5-pound bag anymore.”
Grocery prices are particularly noticeable because they account for a large portion of a typical household’s budget, about 8 percent on average, government data shows. For low-income families, it’s often more than that.
How do people adjust to higher prices?
For a while, many just gritted their teeth and paid the price—but Americans began to fight back.
PepsiCo, which reports earnings this week, said sales of its Frito-Lay snacks actually declined in the latest quarter. In part because shoppers are so put off by the higher prices, they’ll cut back on the chips altogether or switch to cheaper store brands.
Amanda Whitworth fills the grocery shelves at a Target store in Florida. She often found herself directing customers to discount retailers to buy items on sale.
“You may have never considered Market Pantry bread, but a large loaf of bread costs $1.39,” Whitworth said, referring to Target’s private label brand. “While it might not be someone’s first choice, it’s a quarter of the price of some breads.”
According to the latest consumer inflation report released this week, grocery prices have risen just over 1% over the past 12 months.
Frederick J. Brown/AFP via Getty Images
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Frederick J. Brown/AFP via Getty Images
Whitworth also buys food for her family and said she makes similar substitutions herself.
“Before, we would buy a big bag of frozen chicken nuggets for our son. This bag was an extra three bucks,” Whitworth said. “So we started making homemade chicken nuggets, and we’ll probably never go back to that because they’re so delicious.”
This sends a message to large food manufacturers. When PepsiCo and other companies started losing market share, they became more cautious about pushing up prices. In some cases, they’re starting to offer discounts — which is one reason why grocery prices aren’t rising as fast as they once were.
So will grocery prices finally drop?
to some extent.
Prices for some individual groceries have dropped. For example, fruit and vegetable prices fell last year. So are the prices for milk and cheese.
However, the overall cost of groceries is unlikely to fall significantly.
But there is a silver lining. As grocery inflation slows, wages are catching up.
Last year, average wages rose 3.9%, or about three and a half times the price of groceries.
Now, the average worker must work about the same number of hours as before the COVID-19 pandemic to buy a week’s worth of groceries.
That’s good news — even if it doesn’t seem that way to many Americans.
