A common stress shared by communities at large in today’s economy is the constantly rising rate of inflation we are experiencing. Naturally, there is some disagreement amongst various groups on how expensive daily life has really become due to differences in perspective. What is unanimously agreed upon, however, is that services and goods are definitely pricier than they used to be with no end in sight to the increases.
Let’s talk inflation statistics
Using data from the latest Consumer Price Index, The Street had noted that, “indicating prices rose for a host of goods and services by 0.4%. This pins the 12-month inflation rate at 2.9% — the upper end of analyst forecasts”. The most common prediction for the report did come in at 0.3% to 2.9%.
Let’s take a look at how much change was documented in core materials and services for December (as compared to the previous month):
- Food: up 0.3%
- Energy: up 2.6%
- Gasoline: up 4.4%
- New cars: up 0.5%
- Used cars: up 1.2%
- Apparel: up 0.1%
- Shelter: up 0.3%
- Transportation: up 0.5%
- Medical care: up 0.2%
- Medical Care Commodities: 0.0%
Whilst medical care commodities maintained itself with un unchanged rate, every other metric shows an increase from November 2024. Gasoline showed the biggest increase which would begin to explain the increase for everything else. Higher fuel costs means higher transportation costs for goods which then lead to an increase in the price of goods so that businesses can still close their books with a profit.
As a result of this, the costs of products have increased regardless of the type of store. Big box stores like Walmart or Target are becoming too expensive and specialty or luxury stores are becoming even more unattainable to the common man.
The Consumer Price Index (CPI) report found that, “the index for food at home rose 1.8% over the last 12 months”. With regards to bare essential types of foods, the CPI report also concluded, “the meats, poultry, fish, and eggs index rose 4.2% over the last 12 months and the nonalcoholic beverages index increased 2.3%. Over the same period, the index for other food at home rose 0.8% and the index for fruits and vegetables increased 1%. The dairy and related products index increased 1.3% over the year and the cereals and bakery products index rose 0.8% over the same period.”
How is Target targeting savings for its clients?
The obvious response to the rising cost of living is to bargain hunt and adopt a frugal mindset. This might come across as counterintuitive because no amount of frugality can combat inflation. However, big box stores appear to be trying to keep prices down enough to encourage more customers to shop thereby boosting their sales.
Retailer Target has recorded a 2.8% increase in holiday sales for the last two months as compared with the period earlier in the year. Digital sales were up 9% from the previous year and traffic increased both in-store and online by 3%.
Target’s Black Friday and Cyber Monday promotions brought the company a record day of sales. The retailer opted to leave its profit outlook as is with the reasoning that this would not lift the bottom line in a meaningful way. The competition between them and other big box retailers is tight since Walmart is known for its cheap prices which will bring in more customers, and Costco charges a membership fee which brings in extra profit.
Chief operating officer of Target, Rick Gomez, pointed out that, “the consumer was being very intentional”, the implication of which is that customers were spending generously during the holiday promotional season. He also noted that despite this, “consumers are working on a budget”.