People really begin noticing inflation when it shows up in things that they regularly buy. That’s why gasoline and milk get so much attention. Add bread to a growing list of basics that are rising in price and crushing consumer sentiment.
Amid the highest US inflation in four decades, bread prices have soared this year, pushing more premium options to an unheard-of $10 a loaf and beyond.
“It’s kind of like a punch in the nose,” said Mark Cohen, director of retail studies at Columbia University. These are prices “nobody has seen before” and have the same impact as gasoline hitting $5 a gallon, he said.
The big question with the US economy is how long can consumer demand hold up amid such inflation. When shoppers are worried about their finances, they traditionally cut back on discretionary items, and they are doing that (see Netflix and Peloton).
But the cracks in demand are spreading to basic goods. Shoppers are skipping the bread aisle, with unit purchases from US grocers declining 2.7% over the past year through July 2, according to data from NielsenIQ. Americans have also bought less milk and eggs from retailers over the same period, though a portion of all these declines can be chalked up to a return to eating out.
Two major producers of packaged goods said last week that they are seeing waning demand. At PepsiCo Inc., price increases have hurt volume, including declines last quarter in North America for its beverages — which span soda to juice — and snacks. Conagra Brands Inc., the maker of Slim Jim jerky and Hunts tomato sauce, plans to keep raising prices even while acknowledging that those hikes led to a 6% drop in units.