U.S. grocery companies are cutting prices on some key items one after another to draw consumers into stores. Still, analysts say overall grocery prices are expected to keep rising, meaning the burden at the checkout likely will not ease much.
Walmart, the largest U.S. retailer, said on the 6th (local time) it would cut prices on many popular items. Walmart will reduce the price of ground beef by 12% and cut cherry prices in half. A 24-pack of Coca-Cola will also be sold for about one-third less, at $9.97. Prices on a wide range of products, including household goods, toys and clothing, will also be reduced.
U.S. President Donald Trump said on the social media platform Truth Social, "Good news. I have received a report that Walmart, one of the biggest and best retailers in the United States, will undertake significant price cuts at our administration's request to commemorate the 250th anniversary of America's founding." However, Walmart did not mention the Trump administration in its press release.
The New York Times (NYT) analyzed that companies are cutting prices because weakened consumer sentiment has persisted. Over the past year and a half, grocery purchases have declined due to rising food prices, reductions in the Supplemental Nutrition Assistance Program (food stamps), and increased use of obesity treatments, and consumers' wallets have thinned further as gasoline prices climbed amid the Iran war.
In a poll conducted by CNN in May, 61% of Americans said they changed the types of groceries they buy to stay within budget.
Since the start of the year, grocery companies have pursued strategies to bring consumers back to stores by lowering prices on some products and expanding private-label (PB) offerings.
Whole Foods Market, which once carried the nickname "Whole Paycheck" because of high prices, has moved to cut prices by expanding its private-label products. The company said it "reduced prices on more than 900 private-label products, including '365 by Whole Foods Market.'"
PepsiCo lowered prices on some products early this year to boost volume and said the average selling price in its North America foods business fell 2% in the second quarter from a year earlier. The company said the price cuts helped demand recover.
Costco also lowered prices in May on eggs, beef, chicken wings and chocolate almonds. Chief Financial Officer (CFO) Gary Millerchip said, "When we see an opportunity to lower prices, our goal is to be first to cut."
Target likewise cut prices on thousands of foods late last year, and in March this year it released that it would further lower prices on so-called "pantry staples," including flour, canned goods and seasonings.
However, despite discounts on some items, overall grocery bills are not expected to come down easily. The U.S. Department of Agriculture (USDA) expects overall food prices to rise an average of 3.2% this year. While egg prices have stabilized, it expects prices for beef and pork, poultry, fresh vegetables and fruit, and nonalcoholic beverages to rise.
In fact, according to financial services firm Stifel, prices across 61 food categories rose 3.4% in the four weeks through the end of June from a year earlier, while unit sales fell 2.1%.