Price inflation pushed higher in February driven by the escalating crisis in Ukraine and continued cost pressures. Food at home popped +1.4% in February, according to the US CPI, the fastest monthly gain since April 2020. Fast Moving Consumer Goods prices are now up +9.3% year over year putting a significant dent in consumers wallets.
Perishables Prices Head Sharply Higher
Perishables prices are driving total store price inflation. In just the last 6-months alone Perishables prices have risen +8.8%. While the Perishables everyday shelf price has risen +5.9%, a significant cut back in promotions has driven the average prices higher. Within Perishables, prices are rising across all departments. Meat prices are rising the fastest up over 13% in the last 6-months. Meat prices are rising across all categories, but categories like Bacon are rising faster, up over 20%.
The Continuing Disappearance of Promotions
Prior to the COVID-19 Pandemic more than 1 out of every 3 units sold were on promotion. According to the latest NielsenIQ research less than 25% of units sold in the latest week were on promotion. As a result, Engage3 research found that the average price paid by consumers has risen nearly 3% year to date. Everyday prices are up 1% as most of the price increase is coming from the continued decline in promotion support. The few promotions that remain are at historically low depths of discounts. In March, the average promotion only has a 10-15% price reduction.
Many retailers have historically relied on promotions (high-low) or Perishables quality to drive store traffic. With the continued Perishables cost pressure and the decline in promotion support it is now more critical than ever that retailers understand their Price Image Drivers and competitive price position. Leveraging Engage3’s Nobel-Prize winning based science retailers can identify the key items that drive perception and continuously track their price position to ensure that they are winning on the items that matter most to their shoppers.