Food inflation in the US about to reach a tipping point

Food inflation in the United States is reaching a tipping point. If the prices of food in groceries go up any further, industry executives warn that consumer spending habits may change.

Throughout the year, American consumers have accepted the growing costs of basic food items at supermarkets and groceries. But companies that make many of the now more-costly staple goods are concerned about reaching a tipping point.

Supermarket and consumer goods executives have pointed out that price increases that go above five percent are likely to influence consumers to radically rethink their spending habits to make up for the bigger grocery bills that they now have to deal with.

Food inflation in the U.S. is fast approaching a level where consumers will no longer be able to cope. In September, food prices increased by 4.5 percent compared to the same month last year.

Multinational food and drink conglomerate Nestle recently increased its prices by five percent to match inflation levels. The company has been doing this for the past few months despite its impressive sales. It recently announced that its sales increased by 6.5 percent in the third quarter of 2021 compared with the same period last year.

Nestle has also decided to raise prices despite the strong demand for its products.

Other grocery and supermarket executives prepare to raise prices

Multiple companies have warned shoppers to expect higher bills at the grocery store. Billionaire John Catsimatidis, president of Gristedes and D’Agostino Foods, believes prices will increase by as much as 10 percent.

During an interview on Fox Business, Catsimatidis warned that companies like Nabisco, Pepsi and Coca-Cola will most likely prioritize their products and raise prices in order to get ahead.

“I see food prices going up tremendously,” he said. “CEOs want to be ahead of the curve and the way they’re doing it is they’re dropping all promotions. They are dropping low-moving items.”

Catsimatidis does not see this trend reversing. He believes it will get worse. “I see over 10 percent [price increase] in the next 60 days,” he warned.

The billionaire CEO said grocery companies like his own are going to make a lot of money during this period of rapid inflation.

“Why give away something when you don’t have to give it away and you make more margin?” asked Catsimatidis. “So, I think that now these companies are going to have record profits in the third quarter.”

Albertsons CEO Vivek Sankaran is a bit more optimistic. He believes food inflation is still manageable and consumers aren’t turned off by the price increases just yet. He further claimed that the price increases have not resulted in “any fundamental change in the behavior of consumers as to what they’re buying.”

Sankaran admitted that getting food items can be “spotty” for many consumers due to availability, but he claimed they shouldn’t be worried as many companies like his own are providing customers with alternatives.

“You may not find exactly what you want, but you’ll find something else,” he claimed. “Next week, you might get exactly what you want, because a lot of products are on allocation.”

Sankaran said that the current shortages “are nothing like we saw” during the early days of the Wuhan coronavirus (COVID-19) pandemic.

According to Sankaran, many stores had empty shelves during the early stages of the pandemic. He said this is not the case right now even though many grocery stores all over the country are reporting shortages in many food products. (Related: They insist everything will be fine as we face shortages of chicken, coffee, diapers, fish sticks, frozen meals, carbonated drinks, etc.)

Learn more bout how Americans are reacting to the radical price changes in groceries by reading the latest articles at FoodSupply.news.

Sources include:

WSJ.com

FoodInstitute.com

FoxBusiness.com

Finance.Yahoo.com