Easing Inflation Keeps Grocery Spending Steady
Consumers’ balance of wariness and resilience continues, supported by a fresh round of sales data. In fact, the latest numbers from the U.S. Census Bureau reveal a slight but still higher-than-expected 0.1% bump in sales for a 2.1% year-over-year (YoY) lift.
According to the Census Bureau, advance estimates of total retail and foodservice sales were $710.8 billion. Grocery store sales hit close to $74.46 billion last month, landing between the $74.13 billion in June and $74.89 billion in July. Zooming out, grocery sales are up on a YoY basis.
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The macro sales outlook and the grocery picture reflect consumers’ willingness to spend, but adjust their behavior when needed, industry observers noted. “After the better-than-expected July increase in retail sales, the U.S. Census Department of Commerce reported continued momentum with a 0.1% month-over-month increase for August. This slight rise defies many projections of a decline. A year-over-year uptick of 2.1% also materialized in August as consumers seemed to embrace falling inflation,” said Chip West, director of category strategy at RR Donnelley (RRD). “Grocery sales have seen a slight increase of 1.5% compared to August 2023. Across grocers, we’re seeing expansion among store brand offerings as consumers increasingly seek out value and great prices. Retailers that want to maintain a strong customer base need to continuously provide deals and value.”
Jack Kleinhenz, chief economist at the National Retail Federation, also weighed in on the latest government statistics. “These numbers show the continued resiliency of the American consumer. While sales growth decelerated from last month’s pace, there is little hint of consumer spending unraveling. Households have the underpinnings to spend as recent wage gains have outpaced inflation even though payroll growth saw a slowdown in July and August. Easing inflation is providing added spending capacity to cost-weary shoppers,” he remarked.
Other new data shared by San Antonio, Tex.-based 210 Analytics affirmed shoppers’ collective inclination to spend wisely. “Retail appears to be benefiting once more from consumers eat out at restaurants less often and when they do, adjust their orders to save money. With takeout and delivery, that means retail is still often the ‘plus one’ to the core meal coming from a restaurant,” said principal Anne-Marie Roerink.
According to Circana data shared by 210 Analytics, total food and beverage sales rose 2.3% for the five-week period ending Sept. 1. Perhaps impacted by the Labor Day holiday and end-of-summer celebrations, fresh beef sales climbed 4.3%, while sales of fresh chicken went up 2.8%, fresh turkey increased 7.2% and fresh lamb jumped 27.1% in that time frame.
During a peak harvest month, produce sales also surged, led by berries, tomatoes, potatoes and onions. 210 Analytics also shared that prepared meats experienced a 12.9% gain in sales. In-store bakery sales were flat and frozen foods are back in growth mode.
Meanwhile, the overall outlook remains somewhat in the woods ahead of the pivotal U.S. presidential election. This week, the U.S. Federal Reserve met and announced a substantial .5% interest rate cut aimed at stimulating the economy.
