CHICAGO — Rising commodity prices continue to shape consumers’ decisions to eat in and spend less in-store, according to recent data from newly merged market research firms IRI/NPD.
Bargain hunting has become a preferred consumer practice after store prices rose a total of 13.4% in the 52 weeks to August 28, with the butter/margarine/spreads category recording the most sharp increase to 30%.
Between July 2022 and August 2022, prices increased by 1.6%. Soft drink and fresh fruit prices led the way, each rising 5.3%, IRI said.
“With inflation hitting 8.5% in July, it’s no surprise that consumers are opting for cheaper options and opting for more value,” said Krishnakumar Davey, president of thought leadership at IRI.
Out-of-home food costs have risen less than store costs since 2021, an increase of 7.6%, but eating out remains the most expensive option, costing almost 3.5 times more.
Consumers reacted accordingly, resulting in a 3% drop in food services traffic from July 2022. When eating out, consumers are more likely to choose value options like restaurants at fast service.
“As the pandemic and recent inflationary pressures have altered demand, restaurants and food outlets delivering value, convenience and in-home enjoyment are a priority for consumers,” Davey said.
Rising prices led to lower unit sales of most food and beverage products, according to other recent IRI data.
Dollar sales have increased, but this growth is the result of price increases, as overall retail food and beverage sales have declined 4.5% over the past year and volume sales have decreased by 4% over the same period.
Volume declines were steepest in categories with large price increases, including frozen dinners, cookies and coffee, which rose 18.6% over the past year.
“We’re seeing signs of consumer stress, especially among lower-income households,” Davey said. “Consumers are buying less in discretionary food and beverage categories and shopping more frequently in search of better prices.”
Mainstream and value brands have become the top consumer preference, focusing on quick trips to the store instead of stocking their pantries.
Recent data from a June 2022 Consumer Outlook Survey suggests that these costs will remain at the forefront of consumers’ concerns, ranking rising food prices as their top concern.