In its most recent North American Agribusiness Review, Rabobank says consumers are clearly trading down in their shopping behavior, dining out less, and choosing discount grocers more often.
“First reports indicate the higher prices are already affecting consumers’ purchasing decisions for food staples: switching to cheaper alternatives, such as lower-priced brands and private label, and deal and discount shopping,” the report said.
Inflation, and rapid expansion of store openings, have contributed to increasing sales for discount grocers.
“Discount grocers are benefitting from rising price sensitivity at the expense of premium and natural stores, with discounter foot traffic up 10 percent to 15 percent in 2022,” the report said.
Restaurants have benefitted from pent-up demand for dining out, but Rabobank expects that to soften as consumers tighten up spending.
“Eventually the pent-up demand for eating out will also wane,” the report said. “Restaurant revenue growth will slow, remaining positive, but a higher number of consumers will choose to eat an affordable meal at home instead of splurging at restaurants or ordering delivery.”
Through August, the average retail price per unit of vegetables was 8.2% higher, with most items lower on volume than the previous year.
Potatoes and onions showed the highest relative price increases and were the only vegetables whose volumes increased year over year despite the higher prices.
“The two vegetables are staple food, and their retail sales usually increase when consumers’ real disposable income decreases,” the report said. “On the opposite side of the spectrum, retail dollar sales of packaged salads and sweet corn dropped YoY driven predominantly by 8.3 percent and 19.4 percent YoY decrease in volume, respectively.”