On an earnings call, the CEO of Kroger, the third-largest grocery chain in the U.S. behind Walmart and Costco, revealed that the cost of groceries is now affecting even customers who would not be as “budget conscious.”
“The reduction of excess savings built up during the pandemic, higher interest rates and the effect of inflation are pressuring customers’ ability to spend,” Kroger CEO Rodney McMullen stated on the company’s quarterly earnings call. “This is especially true for our most budget conscious customers, as we’ve been seeing for a while now, but we’re now seeing other customer segments beginning to make changes as well. Customers are purchasing lower-price cuts of meat, buying less, and focusing on essentials.”
McMullen added that Kroger, which is expected to merge with Albertsons, the sixth-largest grocery chain in the nation, is responding by “keeping prices low through promotions, including loyalty, discounts, personalized offers and fuel rewards,” Supermarket News reported.
“The food industry has always been competitive and will continue to be after this merger. We are committed to closing this merger because bringing Kroger and Albertsons together will provide meaningful and measurable benefits — lower prices, secure jobs and expanded access to fresh, affordable food — for customers, associates, and communities across the country,” McMullen added.
In February, The Wall Street Journal reported, “It’s been 30 years since food ate up this much of your income. The last time Americans spent this much of their money on food, George H.W. Bush was in office, ‘Terminator 2: Judgment Day’ was in theaters, and C+C Music Factory was rocking the Billboard charts. Eating continues to cost more … In 2022, consumers spent 11.3% of their disposable income on food, according to the most recent USDA data available.”
In April 2023, the Federal Reserve Bank of Kansas City noted, “Food inflation has been above headline measures of inflation since early 2022. … Growth in the price of processed food has driven inflation for food at home since 2022.”
