Back in March and April, it made sense that groceries cost more. You were stockpiling. Your neighbors were stockpiling. Distribution networks were messed up by lockdowns.
Back then, empty shelves (low supply) and a widespread desire to leave home as little as possible (front-loaded demand) spelled high prices.
So, in late summer, why were prices up 5% compared to a year ago? There are plenty of possible explanations that touch on both culture and economics.
One theory from a Bloomberg reporter: Nobody has time to comparison shop in the aisles anymore. You can’t breathe easily through your mask, you don’t want to touch too many things, there’s a line of folks outside waiting to get in, and virus-bearing droplets may be floating around — are you really going to take time to compare prices on your phone or up and down the aisle?
Sure enough, stores are offering fewer discounts than they normally do, and that’s driving up the cost of your average grocery run. Usually, one-third of all products are marked down; now, it’s about one-quarter, Yahoo News reports. “Promotions offered to consumers continue to be suppressed below their pre-COVID-19 levels for the fifth straight month,” said consumer analyst Phil Tedesco.
Along those same lines, the price growth seems to be among more expensive products. Phil Lempert, a retail analyst, told Washington Checkbook that the premium is increasing for buying national brands as opposed to store brands “at least 25 to 30 percent.”
Then, there are the supply constraints: Supply lines and production are still disrupted by lockdowns and the inability of everyone to return to work. And it’s becoming more expensive to run a grocery store amid all the added cleaning and spacing, plus stresses on staffing. Since this cost increase is across the industry, prices will go up.
Meat, aluminum, and many chemicals are in short supply too.
While supplies are down, demand is up because restaurants are closed. Want enchiladas? Back before the pandemic, you could go to the local Mexican joint. Now, everyone’s buying their tortillas, chicken, cheese, peppers, sour cream, scallions, black beans, onions, and chiles at the store.
So, at least some of the price increase is on us: We’re browsing the aisles less and eating at home more. I wonder if our kitchen dishwashers are feeling overworked.
