'Moderation' Is the Word for Prices, Sales in May
The pace of life isn’t the only thing that slows down in summer, when school is out and many people go on vacation. Recent data indicates an easing of consumer spending and a static level of grocery inflation.
According to fresh numbers from the U.S. Census Bureau, overall retail sales rose a scant 0.1% in May and adjusted grocery store sales dipped by 0.4%, to $73.81 billion from $74.09 billion the prior month.
[RELATED: Where Are Consumers' Mindsets and Wallets This Summer?]
Although those statistics suggest that consumers may be in caution mode as the mid-point of 2024 arrives, other government data indicates that inflation is stabilizing. The U.S. Bureau of Labor Statistics (BLS) reported on June 12 that the food-at-home Consumer Price Index (CPI) was unchanged from April to May.
The index for dairy and related products declined 0.5% last month, as did the CPI for nonalcoholic beverages, down 0.3%. The index for fruits and vegetable and “other” food at home was unchanged during this time. Prices in the meat, poultry, fish and egg and cereals and bakery product categories each increased by 0.2% in May.
At the same time, other food and beverage sectors are experiencing challenges. The CPI for food away from home climbed again last month, edging 0.4% higher and continuing an upward trend. The U.S. Census Bureau reported that advance sales were down 0.4% in foodservice and drinking establishments in May.
The subdued data reflects the marketplace, according to some analysts. “Even as the CPI held steady in May and gas prices dropped, inflation remains incredibly stubborn. This held back a greater monthly spending increase. Overall inflation is slowing, but food prices remain high, and they're higher than they were last year,” observed Chip West, a retail and consumer behavior expert at Vericast.
Still, he said, the climate is better for grocers than restaurateurs. “Buying food from grocery stores continues to be more affordable for consumers compared to dining out. In order to maintain this momentum, grocers need to focus on promoting value, affordability, and their popular private labels for the deal-savvy consumer,” West advised.
Anne-Marie Roerink, principal at 210 Analytics, agreed. “Inflation in food retailing is leveling off but remains high in foodservice, resulting in a home-centric month and a big May performance for many fresh departments,” she declared. According to Roerink’s latest performance reports released this week, total food and beverage sales rose 2.3% on a year-over-year basis last month amid mild inflation.
Data from 210 Analytics and Circana shows that produce was a hotspot last month, posting a 5.9% gain in pounds for fruit and a 2.4% bump for vegetables. Meat was the biggest driver in fresh, with $9.9 billion in sales during May, and deli departments also fared well, with 3.9% growth in pounds sold, led by prepared meats, pizza and appetizers.
