Rising prices are prompting more Americans to buy off brand items, and major supermarket chains are encouraging the trend by slashing prices on many private-label products.
Conversely, the cost of many brand-name goods continues to march ever higher. Hormel Foods this week said it is increasing prices on brands including Spam and its pre-made guacamole as the global producer looks to cover the higher costs of transportation, packaging, meat and avocados.
The highest inflation in four decades has more Americans trying out less costly, private-label products, according to Walmart, the nation’s largest retailer. And with gas pricesalmost daily, American families are facing thousands of dollars in higher costs at the pump, putting more pressure on their budgets.
“Everybody is experiencing that broad-based inflation, but that doesn’t make the conversations any easier,” Hormel CEO Jim Snee told analysts on Thursday.
The biggest price spikes will be seen in “Spam because of our protein impacts and packaging costs and Wholly Guacamole because of avocado costs,” Snee said. Skippy peanut butter would be least affected, Snee said.
The increases are slated to take effect in late July.
Walmart: Customers are trading down
While higher food and gasoline prices haveabout the U.S. economy, , a bright spot amid the economic headwinds of inflation and rising interest rates. Walmart said that consumers are also buying smaller portions on top of switching to private label brands.
“We do see some consumers switching — we see categories like deli, lunch meat, bacon, dairy, where we see customers trading from brands to private brands,” John Furner, president and CEO of Walmart U.S., told analysts in a recent earnings call.
“And we see switching from gallons of milk to half gallons,” Furner said. “We’ve got to do what we can in those categories to keep costs low.”
In that vein, supermarket chains have embarked on discount campaigns to entice inflation-scarred shoppers.
Lidl on Wednesday said it was dropping prices on more than 100 items, including brand names and Lidl Preferred Selection in its roughly 170 stores in nine East Coast states.
And in mid-May, Weis Markets said it was cutting prices on hundreds of frozen products, including brand-name and Weis Quality products at its 196 stores in seven states.
Giant Eagle recently rolled out lower prices for those enrolled in its myPerks program at its more than 470 stores in Indiana, Maryland, Ohio, Pennsylvania and West Virginia.