As food prices soar to historic highs due to inflation, American consumers are not getting relief from grocery stores as they have been offering fewer discounts since the pandemic, the Wall Street Journal reported.
Food producers generally support retailers with discounted prices, which allows grocery stores to offer lower prices to consumers — typically paying back 15 to 18 percent of costs to retailers, according to Jim Hertel, an executive at a market research firm.
However, as food producers deal with increased manufacturing costs, labor costs, supply chain issues, drought and flooding, and disease, they are forced to jack up their own prices and are at a reduced capacity to offer discounted prices.
The burden of offering discounts to consumers is then shifted to grocery stores, who were already paying more to producers.
As a result, retailers are offering fewer discounted prices than they were before 2019.
Per the Journal:
On average, 20.6% of food and beverage products were sold with price reductions in the third quarter of this year, according to research firm Information Resources Inc., down from 25.7% for the same period in 2019. Promotional levels are down from 2019 levels for all grocery categories except for meat, data show.
One general manager of a Chicago-based grocery store says he has not been able to offer discounted milk and yogurt items for about five months.
“It’s hard to run anything on promo,” said Kosta Drosos, noting the small discounts he is offering are not enticing enough to draw more customers.
Albertson Cos., which owns and operates Safeway and Jewel-Osco, does not anticipate to be offering discounts on products within the year.
As grocers continue to promote cost-saving deals, there is concern that consumer demand is not high enough.
One grocer, Skogen’s Foodliner Inc., noted they are investing 15 percent more into discounts than last year but are still having trouble bringing in enough shoppers.
As Breitbart News reported, recent government data shows that food inflation saw the largest price increase since 1979. Grocery store prices are 13.5 percent higher than they were last year, and overall food prices are 12.4 percent higher.
You can follow Ethan Letkeman on Twitter at @EthanLetkeman.
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