Food prices have risen at the fastest pace in more than 40 years and food makers and consumers are scrambling to find ways to mitigate the impact, The Wall Street Journal reported.
What Happened: Store-bought food prices rose at a seasonally adjusted 2.6% in April, marking the biggest monthly gain since 1974, according to WSJ. May data is scheduled to be released Wednesday and could show an acceleration in growth.
Food prices rose 5.8% for the 13-week period ended May 30, according to data from market research firm Nielsen.
This is partly due to companies buying new equipment, remodeling factories and configuring stores to better keep people safe from the COVID-19 pandemic.
Consumers are demanding lower prices and food companies are scrambling to satisfy their needs. Some food companies like Campbell Soup Company CPB are offering larger sizes that cost less per ounce. Other companies like Mondelez International Inc MDLZ are looking at smaller packaging to lower the total cost, the WSJ reported.
Why It's Important: For the first time in decades, consumers are likely to increase spending on food as a percentage of disposable income.
Nielsen notes that consumers are finding 28% fewer discounts in stores as grocers and food makers are focused mostly on their top-selling items.
What's Next: Food companies are now responding to the lack of promotions and money saving options through adding more lower-priced products, according to WSJ — and private label products and discount grocery chains are looking to continue taking share from their more expensive rivals.
Related Links:
Campbell Soup's CEO On The 2 Phases Of Pandemic Sales
Making Sense Of Why Consumers Are Switching Their Grocery Store Habits
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