If inflation is sticking around, so is eating at home. In some good news for grocers, a fresh IRI report found that despite double-digit inflation, spending for food at home remains strong.
Breaking it down, IRI data shows that at-home food and beverage inflation was 13.2% higher in the fourth quarter of 2022 compared to the fourth quarter of 2021. Even in that high-price climate, the research indicates that center store sales were up 11.1% and perimeter sales rose 6.3% in the recently-concluded last quarter of the year.
According to the "Impact of Inflation on Consumer Behavior" report, consumers have become comfortable eating at home, with high-quality, convenient meals and snacks on the rise. Many premium products also resonate with consumers, like energy drinks.
That said, while they are eating consistently at home, consumers are adjusting some of their habits to avoid high grocery bills. For example, IRI’s report confirms that consumers are increasingly embracing private label brands, with store brands increasing their share of 75% of all food and beverage categories seeing growth within private label. Minor changes are also making a difference among shoppers, like taking more frequent quick trips to the store or switching from liquid laundry detergent to value-priced powder forms. This report also shows that pure growth in the food retail channel is lagging growth in dollar store, club store and e-commerce channels.
Additionally, consumers may be weighing purchases based on prices at the time in a particular category. IRI’s data reveals some notable price fluctuations, with inflation spiking to 23.2% in dairy and 15.3% in center store and moderating to 5.4% in alcohol and 3.4% in fresh meat and seafood.
Alastair Steel, executive, client engagement at IRI, sums it up this way: “The CPG space has proven to be less volatile and more resilient during economic downturns than other sectors. However, shoppers are feeling the impact of high prices and are shying away from discretionary purchases. Multiple tactics are being used to reduce spend and manage budgets, with value channels performing well.”
Looking ahead, the report notes that as inflation remains comparatively high, consumers will continue to find ways to meet their budget needs and enjoy at-home eating and drinking experiences. IRI’s inflation report also projects promotions to increase throughout this year as omnichannel competition increases.