Cash-Strapped Consumers Bear the Brunt of Grocery Price Inflation

PYMNTS research finds grocery inflation is felt most acutely by those who already struggle financially.

The Context

Inflation is affecting grocery shoppers of all income brackets and financial lifestyles. For instance, the United States’ largest grocer, Walmart, shared Tuesday (Feb. 21) on its fourth-quarter earnings call that higher-earning consumers have been making more food purchases from the mega-retailer, suggesting that they are trading down from more premium retailers.

“We continue to see strong share gains in grocery, with nearly half coming from higher-income households,” CFO John David Rainey said.

For lower-income consumers, the habit changes have been more dramatic. For example, Casey’s General Stores, the nation’s third-largest convenience retailer, noted in December that these shoppers have been turning to packaged food and beverages as more affordable alternatives to restaurant meals when they do not have time to cook.

“We’re [starting] to see [them] taking different products and using those as meal replacements,” CEO Darren Rebelez said. “So, think of a protein shake or enhanced juices as an alternative to a meal.”

By the Numbers

Indeed, consumers who struggle with money are feeling the effects of food inflation more than their more financially secure counterparts.

Research from the latest edition of PYMNTS’ Consumer Inflation Sentiment study “Consumer Inflation Sentiment: Perception Is Reality,” for which PYMNTS surveyed more than 2,100 consumers in December, revealed that consumers across the board perceiving grocery price increases far greater than those measured by the U.S. Bureau of Labor Statistics (BLS).  Yet this inflation is felt most dramatically by those who live paycheck to paycheck with issues paying bills.

In December, the Bureau of Labor Statistic’s Consumer Price Index noted grocery prices rose 12%. Yet, in that time, consumers who do not live paycheck to paycheck perceived this inflation to be about 17%, and those who live paycheck to paycheck without issues paying bills estimated it at around 22%. In contrast, those who live paycheck to paycheck with issues paying bills felt grocery inflation to the tune of 27%.