When you grocery shop, are you stocking up less, buying only what you need for tonight's dinner, and snapping up more generics? You're not alone.
The worst food inflation since Jimmy Carter was president has shifted consumer shopping habits, according to Cincinnati-based supermarket giant Kroger.
The nation’s largest supermarket chain saysshoppers arecoming in more frequently–but buying fewer items per trip, and buying more of Kroger’s store brands over name-brand products.
Stopping for a few items at Kroger in downtown Cincinnati,Clara Harkavy, a 60-year-old general manager at a construction firm from the city's North Avondale neighborhood, said rising food costs and inflation have changed her habits.
“I’m not buying meat lately – it’s just too pricey,” Harkavy said, adding she’s cut back on going out to restaurants and trying to string errands together to drive less. She noted she purchases more grab-and-go items from the Court Street Kroger for home to cut back on eating out.
“I’m not mad about it," she said, "but I can’t say ‘Let’s run out to (a) restaurant.’”
What is the inflation on groceries? When will grocery prices level out?
Consumers may not have seen the worst of soaring food pricesat the supermarket as federal officials estimate grocery inflation will hit 8.5% to 9.5% for all of 2022.
That would be the worst year for “food at home” inflation since 1979,when prices rose 10.8%. The culprit? Federal officials blame soaring gas prices caused by several countries banning Russian oil over its invasion of Ukraine,as well as continued post-COVID-19 pandemic supply chain snarls and other factors.
The higher prices are an unwelcome turn for shoppers who actually benefited from food deflation just a few years ago. In 2016,overall prices dropped 1.3% amid Amazon jumping into the supermarket sector with its takeover of Whole Foods and price wars between Walmart and other players like Kroger. In the last decade, supermarket inflation has averaged 1.7%.
Kroger officials say higher prices from inflation are here to stay for much of 2022, but predicted they would flatten out by the end of the year.
“Rising inflation has consumers rethinking their shopping and eating habits … for customers whose budget are more directly impacted by food and fuel inflation, they are actively looking for ways to save,” Kroger CEO Rodney McMullen told analysts during its latest earnings call. “We’re doing everything we can to help this customer stretch their budgets.”
Kroger’s profit margin shrank in the latest quarter as the company held back on passing on too much of the cost increases to customers – a move it dubs “investing in price.” Company officials choose to keep some prices in check as a tactical bid to win a larger share of shoppers’ business and to attract new customers.
In addition to Kroger stores, the grocer operates several regional supermarket chains in 35 states, including Fred Meyer, Harris Teeter, Ralphs, Mariano's, Fry's, Smith's, King Soopers, QFC and others. The company has nearly 2,800 stores and employs 420,000 workers.
'Buy less, stretch things out'
Shawnrae Jeter, a 42-year-old hotel worker and mother of six from Cincinnati's Over-the-Rhine neighborhood, said soaring food costs have prompted multiple changes to her grocery shopping.
“My kids can’t go to the grocery store with me – I’m trying to buy less, stretch things out, I don’t just pick everything up because it’s cheap,” Jeter said outside the Downtown Kroger.
She's cooking few dishes with meat and has cut way back on junk food. She’s also trying to go to the store less and only pick up items she needs between trips.
Jeter said she also looks for sales and whatever coupons she can find.
Jeffrey Strong, a 38-year-old dining manager at a restaurant from Dayton in Northern Kentucky, said he was raised to watch his grocery money by frugal parents and honed his skills in his industry. He’s more insistent than ever that he handles family shopping these days.
“We don’t waste a lot: Buy what you need, plan a meal and keep to it – don’t buy a 3-pound bag of something just because it’s on sale, you have to be mindful,” Strong said. “I shop for my stuff. (My wife’s) she’s worse, she wants to feed the neighborhood.”
What's going up? What's not?
So what costs more at the store?
Just about everything: meats, fish and poultry are up 7.7% so far this year; dairy products are up 6.7%; fruits and vegetables are up 6.7%; and cereals and baked goods are up 7.6%, according to the U.S. Department of Agriculture. Many of those categories will edge higher according to its forecast.
The U.S. Bureau of Labor Statistics, which calculates overall inflation figures, says grocery staples –such as eggs, chicken, ground coffee, milk, soda pop, butter, orange juice, bacon, potatoes, citrus fruits, ice cream and ground beef – have seen double-digit price increases.
Should we blame Putin for inflation?
So how does the Ukrainian crisis impact U.S. supermarket customers when America gets its top agricultural imports from Canada and Mexico? Isn’t the top U.S. import from all of Europe wine (yes, it is)?
America’s top agricultural imports from Ukraine are fruit juices and vegetable oils. Its top agricultural import from Russia is crabs.
Ukraine is atop agricultural exporter in Europe. Itsfarm production has been heavily disrupted by the Russian invasion. The head of the United Nations World Food Programme, David Beasley, has said,in fact, starvation is a real possibility in developing countries that rely heavily on Ukraine for wheat and corn.
While China and Europe won’t starve, they have to turn to other countries for the imports they need increasing pressure – and prices – on the world food supply.
Also, several countries including the U.S. have banned Russian oil. Russia produces 10% of the world’s oil supply, which pushes up the demand for (and price of) the remaining 90% of petroleum. That affects shipping prices, including food supply.
And Russia produces almost as much of the world’s fertilizer, which has been shielded from embargoes,but trading has been snarled as many banks and insurers have avoided deals, according to Bloomberg. That drives upprices for farmers and consumers.
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