People Are Just Trying To Survive The Food Inflation

People are just trying to survive the food inflation at this point as consumers have continued to tighten their belts.

People Have Hit Their Limit With High Food Prices
August 8 (King World News) – Gerald Celente:  With consumers turning away from national brands and eating at home instead of out, food companies are scrambling to win back their customers while also trying to protect their margins and what have been comfortable profits over the past three years.

Food producers are raising their prices more slowly, sometimes less than their increase in costs. Restaurants are showering diners with promotions such as the McDonald’s “$5 Meal Deal” and Applebee’s “All You Can Eat Boneless Wings, Riblets & Shrimp.” Burger chain Sonic unveiled a permanent $1.99 menu in July.

“We had 3-percent inflation this year,” Kraft Heinz CEO Carlos Abrams-Rivera said in 31 July comments quoted by The Wall Street Journal. “We only priced 1 percent” into the company’s products.

Pizza chain Domino’s also has increased menu prices by less than its costs have risen, CEO Russell Weiner told the WSJ. Restaurants overplayed their hand, he added, raising menu prices beyond what consumers were able or willing to pay…

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More than 70 percent of consumers think food producers, restaurants, and supermarkets are overcharging, according to a survey earlier this year by the University of Illinois and Purdue University.

Their anger is justified. Companies have indulged in “shrinkflation,” charging the same amount for smaller portions of their products; there is evidence that some businesses have used inflation as a cover to raise prices and pad profits beyond what was needed to cover higher costs.

Linda Khan, chair of the Federal Trade Commission, has asked her agency to investigate the tactics grocery chains have employed “to hike prices and extract profits from everyday Americans at the checkout counter.”

She made her comments during the first public meeting of the federal Strike Force on Unfair and Illegal Pricing, set up by the Biden administration in March to “strengthen interagency efforts to root out and stop illegal corporate behavior that hikes prices on American families through anticompetitive, unfair, deceptive, or fraudulent business practices.”

In the most recent fiscal year, each of the 10 largest U.S. restaurant chains posted profits at least as large as in 2019, the WSJ said. Chipotle Mexican Grill and Olive Garden were among the eateries for which operating margins met or exceeded 2019’s levels.

Snack makers also made out. From 2019 through 2023, Hershey’s net profit climbed 62 percent. Mondelez International, which includes Oreos and Triscuits among its brands, grew its net profit 28 percent over the period.

General Mills and Kraft Heinz each saw profits shoot up 48 percent over the four years, the same time when inflation was rising to more than 9 percent annually. 

“We are coming off a period where companies have enjoyed incredible pricing power,” senior economist Lydia Boussour at EY-Parthenon said to the WSJ.

With consumers hitting their pricing limits, companies are having to become more efficient to protect their margins and even to survive…

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Many are turning to technology, hoping to use artificial intelligence to streamline business processes and cut personnel costs. Fast-food joints are installing kiosks where customers can send their orders directly to the kitchen, cutting the cost of counter workers. 

Starbucks has said it will run more promotions to lure back its lapsed customers and will pay for those deals by improving internal efficiencies. 

Bringing back those lost shoppers might be harder than companies think, Conagra Brands CEO Sean Connolly warned in a July comment quoted by the WSJ.

“It’s not one of these events where we sprinkle a little money on the consumer and they forget that they ever experienced runaway inflation,” he said.

TREND FORECAST: 
As we have often said, once inflation has boosted prices, those prices never return to the level at which they began. 

That means that costs are permanently higher for companies and prices will be permanently higher for their customers. 

Wage gains outpaced inflation over much of the past year but workers have not earned back what they have lost to inflation. And when the real inflation numbers are added up, according to ShadowStats, it is twice the “official” number, thus the “average” plantation worker of Slavelandia is being hit hard by higher costs. 

With credit cards maxed out and savings accounts emptied, we are seeing a new emphasis on thrift among American consumers that will mark the economy for the foreseeable future and that nudge the country closer toward an economic downturn.

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