Supermarket costs still grating away at pocketbooks; it's unclear if prices in 'the center store' have finally peaked

Illustration by C.J. Burton, WSJ

Once you rejoice over cheaper lettuce and pork chops, going to the grocery store remains joyless. "Some prices [are] closer to normal levels. Prices, though, are stubbornly rising for what retail and food executives call 'the center store'," reports Jesse Newman of The Wall Street Journal. "The middle of the store stocks items that can sit on shelves without going bad quickly, from cereal to cookies, paper towels to dish soap—all essentials that consumers can't really put off buying. Prices for potato chips rose an average of 17% to $3.05 per package for the 52 weeks that ended May 27, compared with the previous year, according to NielsenIQ, a market research firm. Mayonnaise increased 23% to $4.93 per container. Applesauce jumped 22%."

Meme via thedigitalmomblog

While there are hundreds of internet memes poking fun at high prices, there are a lot of frustrated consumers out there canceling "all the fun things" to pay for groceries, reports Carmen Reinicke of CNBC. Newman adds, "The persistent price increases for pantry staples are weighing on consumers and limiting their spending on other goods and services needed to power the American economy as people prioritize buying food and other necessities. Two major industries—retailers and producers of consumer packaged goods—have been locked in a power struggle, with retailers throwing their muscle at suppliers to control prices, and suppliers trying to restore or protect their profit margins."

As retailers and producers wrestle, consumers caught in the balance may wonder why mayo is so expensive, but the price of eggs has leveled out. "Kroger CEO Rodney McMullen said that price increases for packaged food tend to outlast those for fresh foods like fruits, vegetables and meat because processed products often have longer and more complex supply chains. Produce, by contrast, can be delivered from fields to stores in just a few days," Newman reports. Big grocers say they're "resisting further price increases from the nation's packaged-food giants or pushing for lower prices—but the process is taking longer than they had hoped."

Families are finding ways to ease the wallet crunch by "increasingly turning to cheaper versions of packaged groceries, while food companies' costs have simultaneously begun to ease. As a result, food-industry analysts say, price increases for packaged food have likely peaked," Newman writes. But higher prices have remained a consistently painful reality. "Since the beginning of 2019, prices for goods sold in the middle of the grocery store have risen by nearly a third, while products on the perimeter have increased roughly 22%, according to Circana Group, a market research firm."

"Lanise Abbott, a postal worker who lives near Chicago, said rising prices for items such as canned fruit and vegetables, bread and cereal have her scouring supermarkets for discounts and switching to cheaper food brands," Newman reports. "She said she would also visit food pantries if it becomes necessary." Target's store-brand sales are growing almost twice as fast as national brands, the chain's chief food executive, Rick Gomez, told Newman: "The number one thing that is on our guests' minds is affordability."