CHICAGO — Prices of consumer goods — including frozen pizza and center store bread — remained elevated in July, according to the latest food inflation report from IRI, a Chicago-based market research firm. Despite recent price decreases in other areas of the economy, such as gasoline, food and beverage inflation continued to persist. Prices for food at home in the four weeks ended July 10 rose 1.2% from the previous month, and 14% from the previous year, according to IRI.
Among the five categories with the largest price increases in the latest data were frozen pizza and center store bread, each up 2.8% from the previous month, IRI said. Meanwhile, frozen pizza prices increased nearly 18% compared with July 2021 and center store bread prices were up 15% in the year.
Refrigerated eggs prices climbed nearly 6% in the month and 47% over the past 12 months. Prices for frozen dinners and entrees increased 3.5% in the four-week period and 23% in the year, according to IRI. Butter and margarine prices in the month were up 3.2%, and 26% in the year.
“Consumers are responding to rising prices by shopping promotions, prioritizing value options and trading down to avoid going without,” said Krishnakumar Davey, president of thought leadership for consumer packaged goods and retail at IRI. “We are advising our manufacturer clients to deploy all levers of strategic revenue management, prioritize strong in-market execution and invest in retailer partnerships to ensure that the right products are available in the right places at the right times.
“Additionally, retailers must have the tools to quickly adjust to changes in consumer preferences to ensure they are offering the right assortment at price points that appeal to price-sensitive shoppers as well as their most valuable customers.”
Promotional activity in food and beverage categories appeared to be returning to pre-pandemic levels as supply pressures eased and consumers increasingly looked for the best deals, IRI said. One of the top categories where promotion increased in July was crackers, with 50% of sales in the month coming from promoted items. Among the top five categories in which promotional sales hovered around 50% were ice cream and sherbet, sports drinks, breakfast meats and bottled water.
Consumers responded when promotions were available. In some of the most promoted categories within the grocery channel over the trailing four-week period, percent of dollar sales and percent of sales volume increased significantly.
“55% of ice cream and sherbet, for instance, was purchased at promotional pricing in the four-week period, 9 percentage points above what it was two months ago,” IRI said. “These promotions generated 93% additional category sales, 13 percentage points more than what it was two months ago.”
Consumers opted for value-oriented categories and traded down to more affordable brands within a category, according to IRI. Within food and beverage, overall volume and units remained resilient in the face of price increases.
“However, the data reveals consumers are purchasing greater-value meal solutions, such as pasta, rice, frozen potatoes and canned soup,” IRI said. “Consumers are buying less in categories such as sports drinks, ready-to-drink coffee/tea, frozen novelties, refrigerated entrees and frozen dinners/entrees.”
Private label continued to grow across food categories. In the four-week period ended July 24, private label share grew most in fresh eggs, sugar, sour cream, shortening and oil, butter/butter blends, flour, frozen meat and bottled water.
Premiumization continued in select categories.
“Mirroring behavior from the Great Recession of 2008-09, consumers are trading down to trade up on small luxuries, including both premium and super-premium imported beer, which saw combined sales share increase 2.6 percentage points to 51.2% share of category sales in the same 13-week comparison,” IRI said. “In a few other categories such as frozen dinners/entrees, refrigerated juices and drinks, higher-priced products in the premium tier have grown share by about a percentage point each.”While food prices are elevated overall, certain food categories have seen prices slightly decline, including fresh citrus fruit, bacon, ice cream and sherbet, beef and packaged lunch meat, IRI said.