There is constant talk about the struggle faced by retailers in recent months, perhaps even years, due to rising inflation rates. Many companies have had to downsize, if not shut down entirely despite having existed for decades previously. Take Joann Fabrics for instance, the craft supply store had been running for 82 years — almost a century — and yet, as a result of the current economic landscape, the longstanding chain will soon close its doors forever.
The fact of the matter is that the pricing of goods keeps increasing whilst salaries remain the same and consumers are struggling to keep up. If retailers like Walmart even seem to be facing the heat, and store closures are the new norm then unemployment rates are bound to increase. This then creates a whole new cohort of consumers who cannot afford to shop freely which in turn impacts the retail industry again. It is a vicious cycle with no end in sight, at least not for the foreseeable future.
Consumer Price Index reveals the state of things
In this economic climate, it seems that only big corporations have the capacity to survive whilst mom and pop shops are left drowning. This is in part due to high interest rates which add an unnecessary level of difficulty and expense in the operational process. The other half of the situation is, of course, that consumers simply cannot afford to buy anything without careful consideration anymore.
Recent Consumer Price Indices revealed a steady increase in the price of just about everything. The CPI for December recorded a 0.4% increase in the cost of food and services. This increase was then followed by a 0.5% increase for January.
Two consecutive months of increases has placed the inflation rate for the year at 3%, a figure that well exceeds the predictions of most analysts.
As most consumers will have noticed, the price of food has been the most shocking increase as of late and according to the CPI, “the index for food at home rose 1.9 percent over the last 12 months. The meats, poultry, fish, and eggs index rose 6.1 percent over the last 12 months as the eggs index increased 53.0 percent.”
Additionally, “the index for nonalcoholic beverages increased 2.2 percent over the same period, while the index for other food at home rose 0.8 percent and the index for dairy and related products increased 1.2 percent. The cereals and bakery products index increased 0.4 percent over the year and the fruits and vegetables index rose 0.3 percent over the same period.”
Walmart CEO shows great concern
Food almost seems like a luxury at this price point and as such, consumers have had no choice but to tighten their budgets whilst being on the hunt for the lowest priced grocer in the country.
Supermarket giant, Walmart, appears to be trying its best to retain customers during this tough time through means of price cutting. Walmart already holds the position of top retailer in the country and if the company truly does manage to slash prices back to pre-inflation levels as it claims to be doing, the title would be well deserved.
Walmart CEO Doug McMillon has shared, however, that despite proving to be a reprieve, these kinds of efforts do tend to fall short in terms of easing the difficulties in its entirety.
“You can see that the money runs out before the month is gone, you can see that people are buying smaller pack sizes at the end of the month,” McMillon shared.
The Walmart CEO also revealed that consumers of all economic backgrounds are feeling the pinch of these price hikes, with some being impacted much more than others.
“There are lots of income levels in this country — if you’re at the lower end of that scale, you are feeling more frustration and pain because of higher food prices,” he sympathized. “They’ve persisted for years now, and you’re just tired of it. And you want it to get better.”