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Here is how food inflation is changing shopping behaviour

With food inflation at an all-time high, shoppers are looking for value, according to a report from Information Resources, Inc., which recently merged with The NPD Group. The report leverages the latest point-of-sale data for July 2022 and includes data covering all food channels, including e-commerce.

July’s data shows that prices of goods remain elevated across grocery categories. Prices for food at-home rose 1.2% from the end of June to the end of July, and 14.4% year-over-year as of July 31. In June, at-home food prices rose 1.2% versus May, and 13.7% year-over-year as June 30.

According to the report, promotional activity – including weekly sales and coupons – in many food and beverage categories is returning to pre-pandemic levels as supply pressures ease and consumers increasingly look for the best deals.

Shoppers are responding when promotions are available, the report said. In some of the most-promoted categories within the grocery channel during the trailing four-week period ending July 10, 2022, the percent of dollar sales and percent of sales volume lift have increased significantly.

“Consumers are responding to rising prices by shopping promotions, prioritizing value options, and trading down to avoid going without,” said Krishnakumar (KK) Davey, president of thought leadership for CPG and retail.

Highest Increases
Food and beverage inflation continues to persist on a sequential and year-over-year basis, despite recent price decreases in other areas of the economy. Categories with the five largest increases in prices include refrigerated eggs, frozen dinners and entrees, butter/margarine/frozen pizza and center store bread.

Key insights from IRI for July are below.

  • Promotional activity is on the rise. Promotional activity – including weekly sales and coupons – in many food and beverage categories is returning to pre-pandemic levels as supply pressures ease and consumers increasingly look for the best deals. Recent data indicates that the top five food and beverage categories where promotional activity increased in the four weeks ending July 10, 2022, show close parallels to the same four weeks in 2019, before the pandemic, with nearly 50% of these top categories’ sales coming from promoted items.
  • Consumers are bargain hunting. Consumers are responding when promotions are available. In some of the most-promoted categories within the grocery channel over the trailing four-week period ending July 10, 2022, percent of dollar sales and percent of sales volume lift have increased significantly.
    • 55% of ice cream and sherbet, for instance, was purchased at promotional pricing in the four-week period, 9 percentage points above what it was two months ago. These promotions generated 93% additional category sales, 13 percentage points more than what it was two months ago.