Consumers are limiting other spending to account for rising grocery prices.
Seventy-two percent of Americans said that increased grocery prices were having an impact on their household budgets, with 34% citing a very significant impact and 38% citing a somewhat significant impact, according to a poll by the Consumer Brands Association and Ipsos. Only 22% said inflation was having a not very significant impact and only 6% said it was having no impact. (The poll of 1,000 American adults was conducted June 17-20, 2022.)
To account for increased costs to their household budgets, more Americans are holding off on purchasing or cutting spending or consumption in other areas. The biggest cutbacks are in driving (52%), large purchases (47%), travel (46%), entertainment (50%) and clothing or other goods (42%).
In other survey findings, the pandemic lost its top spot as the most blamed reason for grocery inflation, dropping more than 10 percentage points from February to June. Nearly all of that change was picked up by supply chain costs and constraints,
More Americans believe solving the problems contributing to supply chain pressure will have a positive impact on inflation. Half of Americans (50%) said that tackling the supply chain would help ease inflation. While many admitted to being unsure (23%), only 16% said it would have no impact and just 11% said it would have a negative impact. Consumer Brands has called for supply chain solutions throughout the pandemic as a means of ensuring continued access and mitigating cost concerns.
As it struggles to catch up with pandemic shutdowns and slowdowns, extreme weather, war in Ukraine and other geopolitical issues, the supply chain has been a driver of sharp increases in wholesale costs. Approximately 70% of the CPG industry’s costs come from wholesale inputs — ingredients, materials and energy. The Producer Price Index has been at or near record highs for 15 months straight, with key commodities for the CPG industry like wheat, diesel, aluminum and more rising sharply above-average PPI.
“The significance of the CPG industry’s responsibility to deliver to consumers has never been more important as inflation hits family budgets and Americans are forced to make difficult choices about where and how to make cuts,” said Katie Denis, VP of communications and research, Consumer Brands Association. “It’s also never been more important to focus on addressing the root causes of inflation, which, for the CPG industry, is skyrocketing wholesale prices that are being spurred, in part, by supply chain disruptions.”
Consumer Brands said it has called for supply chain solutions throughout the pandemic as a means of ensuring continued access and mitigating cost concerns. From the onset of the pandemic and at various times since, the organization has requested labeling flexibility to allow companies to make reasonable substitutions when supplies run short so they can continue manufacturing essential products for consumers. Consumer Brands has also consistently called for options to create greater visibility into the supply chain, including advocating for the inclusion of the Critical Supply Chain Resiliency Program and other key supply chain provisions in USICA-COMPETES as the legislation goes through final negotiations.