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Snap, Crackle and Drop: Falling Cereal Prices as Inflation Holds Steady 

By February 6, 2024No Comments
Snap, Crackle and Drop: Falling Cereal Prices as Inflation Holds Steady
Snap, Crackle and Drop: Falling Cereal Prices as Inflation Holds Steady

While overall CPG inflation is holding steady, +2% over the last 4 weeks, Cereal prices have dived 2.7% over the last 3 weeks as the number of promotions has soared 20%. Last month General Mills CEO Jeff Harmening revealed slowing sales as a result “stronger-than-anticipated value-seeking behaviors”. Engage3 found that of the major manufacturers, General Mills had the greatest fall in effective prices (-3.0%), with others close behind. This could be a clear signal that major manufacturers feel compelled to drop prices to grow demand for their brands. Join us as we delve deeper into the current landscape of inflation and explore why Breakfast Cereal prices are experiencing a notable decline.

Effective and Everyday price

Department Highlights 

Over the past 4 weeks, Overall Annual Consumer Packaged Goods (CPG) inflation remains steady at 2%, signaling economic stability. Within head categories, there were minimal fluctuations with total Edible inflation holding at 2% over the last 8 weeks and the Perishable category maintaining at 0% inflation over the past 4 weeks.

Total CPG

Alcohol inflation has surged to +3% within the past 2 weeks, showcasing a rapid transformation from 3% deflation in the week ending December 24. In tandem with this, the Beverages (non-alcohol) category also experienced an inflation increase to +4% in the most recent week.

Alcohol Inflation

Fresh, Frozen, and Shelf Stable Fruit categories all experienced a decline in their inflation rates, marking a notable trend in the market. Simultaneously, the inflation on Breakfast products, particularly Cereal, has decreased to +2%. Delving deeper, the Bureau of Labor Statistics reported a substantial Month-over-Month (MoM) index drop for Breakfast Cereal, registering the most significant fall since 2007 at -2.4%.

Fresh, Frozen and Shelf Stable

Cereal prices plummet over the last month as promotions increase

Engage3 can reveal that the Effective price of Cereal has fallen 2.1% over the last 10 weeks, but most of this drop occurred over the last 3 weeks, where it fell by 2.7%. Everyday prices fell by a more modest 0.8% over the last 10 weeks.

Of the major manufacturers, General Mills saw the greatest fall in Effective prices at -3.0% and Kellogg’s the lowest (-1.2%). The average Effective price of Private Label brands grew 1.5% as the number of promotions fell 37.7% since the start of November 2023.

Average Unit Price of Breakfast Cereal

Non-Grocery Department Highlights

Post-holiday, Beauty inflation grew to +7%, the uptick is primarily due to the heightened popularity of holiday associated sub-categories, including Cosmetics, Skin Care, and Grooming Supplies.  

Beauty Inflation

Inflation has remained the same over the last 5 weeks in the US, Germany and Italy but increased by 1% in France and Germany. 

Global Trends

Regardless of external market conditions, the right combination of omnichannel competitive intelligence and Pricing Science can help you increase your margin, maintain consistent revenue growth, and increase customer loyalty.  

  • Leverage omnichannel comp monitoring and Machine-learning powered Product Linking to track your product catalog against like-item competitive offerings and respond to competitors’ online and store-level tactics.   
  • Use Price Image to objectively identify the items that most directly influence customer perception, then optimize these items to increase trips and satisfaction while defending margin across the store.  
  • Balance short-term profits with long-term success by optimizing prices toward Price Image and boosting trip frequency and share-of-wallet.  

Click here to request access to the full report and learn how Engage3’s Price Optimization and Competitive Intelligence solutions can help you fuel sustainable growth in any market.