Middle-class shoppers squeezed by decades of high inflation turned to discount supermarkets, boosting sales at Walmart and Dollar General.
While inflation is down to 7.7%, it remains stubbornly high as Americans have felt the pains in grocery lines, with many opting to seek out better deals.
While bread and milk cost $4.79 and $8.99 respectively at high-end Whole Foods, the same items cost nearly half as much at Walmart and even less at Dollar General.
Similar savings can be seen with a couple of steaks, which cost nearly $32 at Whole Foods, while Walmart sells it for $16.77 and Dollar General for just $9. When it comes to a dozen eggs, Whole Foods’ price Foods is around $5.49, Walmart sells them for $3.23, and Whole Foods is $5.49.
Meanwhile butter is $9.99 at Wholefoods, where it’s just $4.48 at Walmart and $4.45 at Dollar General. And the flour fetches about $6.39 at Whole Foods, where it’s priced at $3.83 at Walmart and $4.50 at Dollar General.
Walmart reported annual US sales growth of 8.2% over a year on Tuesday, beating Wall Street expectations as shares rose 7% by midday.
The company noted that about 75 percent of Walmart’s sales growth was fueled by families earning $100,000 a year, demonstrating the flight of the middle class to its stores for better deals.
GlobalData Retail analyst Neil Saunders told CNN, “Although times are tougher, consumers’ desire for value and low prices is playing into Walmart’s hands.”
Dollar General, which regularly boasts low prices, has also seen an influx of wealthier consumers due to inflation, with its inventories rising nearly 4% on Tuesday and 12.66% over the past year.
More Middle-Class Shoppers Are Turning To Walmart, Dollar General And Other Discount Stores For Better Grocery Deals To Save Money Amid Rising Inflation
Annual consumer price inflation fell below 8% last month for the first time in eight months
With annual US sales growth of 8.2% over last year, Walmart attributed its latest success to an influx of more affluent shoppers looking for bargains amid high inflation. Pictured are shoppers at a Walmart in Brunswick, New Jersey
In addition to reporting sales growth, Walmart noted in its report Tuesday that sales of its own private label also grew, signaling customers are choosing to avoid spending money on brand-name items to save money at checkouts.
The store also saw a significant three-month increase from “back-to-school season” promotions across the United States.
Walmart Chief Financial Officer John David Rainey told CNBC that the increase in purchases at the company’s stores reflects the reality of Americans still strapped for cash.
“The wallets are tight,” he said. “People have less discretionary income or less disposable income to spend on things, so they’re looking for value.”
Dollar General cited a similar effect, but the supermarket chain’s Ohio locations are under scrutiny for allegedly benefiting people looking for better deals.
In early November, Ohio Attorney General Dave Yost charged at least 20 stores in the state with price gouging, with inspectors finding as many as 88 percent were cheaper on the shelves than at the actual checkout.
“Ohio residents may ill-afford businesses that lure people with promises of low prices only to trick them at checkout,” Yost said in a statement. “It looks like a company trying to make a few extra bucks and hoping no one notices.”
As of Monday, five stores in Franklin County, Ohio, failed a second inspection looking into price cuts, NBC 4 reported.
Overall, food and drink prices nationwide have skyrocketed 11.2% in the past year due to inflation, with meat and poultry rising 9% and dairy products up nearly 16%. %.
Walmart shares soared, with the retailer seeing its value jump more than 2% on Tuesday after a steady rise over the past six months
Dollar General has seen similar success, with its stock up nearly 4%.
While Dollar General said it has also attracted more affluent customers, the chain’s Ohio branches are under scrutiny for allegedly high prices amid scramble for better deals
The consumer price index rose 7.7% in October from a year ago, marking the fourth consecutive month of declines since the 40-year high of 9.1% reached in June.
The producer price index for final demand, which measures inflation before it reaches consumers, rose just 8% in October from a year ago, also marking the fourth consecutive month that the figure fell the Labor Department said on Tuesday.
Core inflation, excluding volatile food and energy prices, eased to 6.3% year-on-year, after hitting a four-decade high of 6.6% in September.
The numbers were all lower than economists expected, and Wall Street reacted positively, with all three major indexes up from the report.
The producer price index for final demand, which measures inflation before it reaches consumers, rose 8% in October from a year ago in its fourth consecutive month of declines
The Dow jumped again on Tuesday, adding to the recent rally seen on a five-day view
But with labour-intensive service spending returning and the job market still tight, wage pressures could keep inflation painfully high for some time.
The Fed earlier this month made a fourth straight hike in interest rates by 75 basis points and said its fight to bring inflation down to the US central bank’s 2% target will require further rising borrowing costs.
However, the Fed has signaled that it may be approaching an inflection point in what has become the fastest rate-hiking cycle since the 1980s.
Traders are now pricing in a 91% chance of a 50 basis point rate hike at the December Fed meeting.