Over the last few years, people have gotten more protective of their money. As a culture, we’re becoming more frugal, the likely result of layoffs and otherwise lost jobs. We’ve become experts at stretching or dollars in case something bad happens, an instinct that will likely serve us well. Those memories of pinching pennies have made more than a small impression it seems.
In fact, 94% of food shoppers indicated in a report released in early May that they’re still cautious with their spending habits and will continue to be, even as the economy improves. This percentage remains the same as it was in 2010 after the credit crisis. This is bad news for companies like Chipotle and McDonald’s, who plan on raising prices to cover the rising costs of milk and meat.
And food prices aren’t exactly stagnate. Kraft and Hillshire have raised the price on products sold in grocery stores. Milk continues to increase in price. For many, these are items present in their weekly grocery carts. But the American consumer has become good at going on strike, which is to say that we’re simply buying less of expensive items—even milk.
For groceries, there’s a price threshold we’re unwilling to cross. In March, consumer price were identified as having risen 1.5 percent from the previous year—food and housing rental costs accounted for most of the increase.
As grocers like Whole Foods raise prices so as not to dip into profits, more mainstream grocery stores have begun offering similar fare at lower prices—for organic foods, the discount is around 25 percent. While Whole Foods has a hard time starting a price war, Walmart comes by it easily.
Many grocers are willing to lose a little bit of money on things like milk to keep the prices low and the customer coming back.
Jason Hartman has a few groceries he’s not willing to give up on, no matter the cost. Where is your food threshold?
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The Young Wealth Team