Soaring grocery prices are having an impact on consumer optimism and shopping patterns.
According to monthly inflation insights from Numerator, grocery prices continued to rise in June, with beverages seeing the largest impact. While spending remained elevated, optimism is at an all-time low as consumers switch to club and dollar stores to save.
Grocery inflation reached a new high of +15.1, more than doubling since the beginning of 2022. For the four-week period ending July 3, grocery prices were up 15.1% vs. the prior year, up from 7.4% at the beginning of the year. Grocery prices rose at the previously record-breaking year-over-year rate of 14.2% in May.
Grocery categories most impacted by June’s record-setting inflation included frozen meat (+28%), chips (+26%), poultry (+25%), water (+22%), and milk & milk substitutes (+17%). Meanwhile, health & beauty inflation remained relatively flat in June, hovering between 10 and 11%. This is down from January highs of 14.7%.
Household items’ rate of inflation has also slowed, according to Numerator analysis. Prices for household items were up 11.3% compared to the prior year, down 5.9 percentage points compared to their mid-June levels. According to Numerator, household item inflation was potentially impacted by early Prime Day deals in this sector.
Online continues to be the most impacted grocery channel. Online grocery prices grew to +21.5% year-over-year for the four-week period ending July 3. Dollar is the only other channel keeping this growth pace, with inflation rates rising +19.8% year-over-year.
While spending remains elevated, Numerator analysis indicates signs of softening demand. Overall grocery spending is elevated with sales up 13% year-over-year. However, early signs indicate softening demand, with units per trip at a 2022 low of -13%.
In-store spending is at a 2022 high of +24%, with club and dollar channels seeing the largest gains, at +15% and +14% in spend, respectively. Across all income levels, more households are shopping club stores, with traffic up +9% year-over-year. Interestingly, high-income shoppers show the largest increase in spend at dollar stores (+33%) of any income bracket.
Inflation sentiment curbs financial optimism
Numerator is tracking negative trends in how U.S. consumers view their finances in the face of continuing inflation.
- Financial optimism was at an all-time low in early July. Less than half (47.4%) of surveyed consumers rated their financial situation as “good” or “very good,” down from 56.2% of consumers surveyed in July 2021.
- Nearly one-quarter of U.S. households say they do not have spare cash. As of early July 2022, 23.6% of surveyed consumers claimed they did not have spare cash, a trend driven by rural, Gen Z, and low-income households.
- In one counter-trend, travel intentions are up after leveling off in May 2022. More than one-quarter (27%) of surveyed consumers said they would use extra funds for vacations and travel, a trend driven by high-income, Gen X, and rural households.
“As the cost of everyday goods continues to rise, consumers are shopping around to find value,” said Eric Belcher, CEO, Numerator. “Many of these shifts, including high-income households trading down to dollar stores, are unexpected.”
Changes in Numerator's Price Pulse are calculated at a category level. The average price per item within a category is based on verified purchase data from over 100,000 Numerator panelists, and the average price from the past four weeks is compared to the same period one year ago. The Price Pulse includes a cross-channel view of prices, as well as channel-specific views and cuts by consumer demographic groups. Numerator’s Financial Outlook Tracker leverages an ongoing survey that collects approximately 10,000 responses from active shoppers each week. Consumers are asked to rate their current financial situation in addition to sharing spending intentions. The tracker has additional breakouts by ethnicity, generation, income level, and urbanicity.