Higher Food Prices Affecting Consumer Purchasing

Higher food prices continue to change the way Americans shop, according to a new report from CoBank's Knowledge Exchange. The report says food prices are up 2.7% from a year ago and about 26% higher than five years ago, prompting more consumers to switch to lower-cost store brands, shop at discount retailers, or simply buy fewer groceries.

"Price remains top of mind for consumers, but they are also factoring in experience and a broader notion of value, whether pertaining to quality or quantity of product for that expected higher price," said CoBank economist Billy Roberts. "With consumers stressed by fuel costs, retailers expect a shift in spending patterns and increased demand for lower-price options. Larger retailers like Walmart and Kroger are using price investment, rollbacks and value positioning to protect traffic and market share, while food and beverage manufacturers are emphasizing affordability through pricing, promotions and productivity gains."

CoBank also notes inflation, elevated energy prices, and higher interest rates continue to pressure the overall economy, with many economists now expecting borrowing costs to remain higher for longer than previously anticipated.

The food purchase debate has been a long battle in the food and nutrition industry, but the shifting rules for retailers and consumers are creating confusion at the supermarket level and raise concerns about a potential decline in food and beverage sales," Roberts said. "These stressors are hitting consumers as they continue to adapt to years of cumulative price increases."

Click Here to read that CoBank report.

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