Chris Scharff, a computer security clerk, noticed prices going up in New York state. They’re small hikes, but “clearly I’m paying more attention,” he said.
If inflation, which is nearing a 40-year high in the country, persists, Eric Schwartz, a Connecticut publisher, plans to reduce his expenses: fewer car trips, fewer restaurants and “a little more pasta.”
Meanwhile, distribution companies are on a tightrope. Between supply chain problems, rising commodity prices and higher wages for its employees due to labor shortages, its costs are rising sharply. However, they should still be careful not to raise their prices too much so as not to discourage their customers.
Flooring seller Armstrong Flooring, on the other hand, filed for bankruptcy last Sunday for failing to raise prices enough to cover rising costs for raw materials and transportation.
With government aid, rising wages and remote work, “consumers spent at very high levels during the pandemic,” said Marshal Cohen, a retail sales specialist at the NPD consultancy. But with the return of leisure spending and inflation, consumers “become more selective.”
Hard data
According to NPD, sales of consumer goods fell 1% in April in value and 7% in volume. “People spend the same, but for fewer products,” summarizes Cohen.
“Although inflation appeared a few months ago, it is only now that it is really starting to have an effect” since consumers have understood that it is not temporary, said Neil Saunders of Global Data.
They react differently depending on their income, some cutting back on what they consider to be superficial expenses like vacations or streaming subscriptions, and others by eliminating clothing purchases or choosing lower-priced brands.
Procter & Gamble, which sells soaps and toothpaste or diapers, has increased its prices since June and expects further increases in the coming months.
The breadth and timing of the increases depends on each product category, the firm’s chief financial officer, Andre Schulten, said during the group’s earnings presentation at the end of April.
Coca-Cola, which benefits from strong consumer loyalty, has regularly raised its prices for a year to pass on rising costs to its customers. It’s better to do it while consumers are ready to accept it “rather than being left behind,” its president, James Quincey, recently said.
For mattress maker Tempur Sealy, “the market clearly slowed down a bit” in March and April.
AFP Agency
Source: Ambito
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