Consumers Focus on Value as Inflation Weighs on Holiday Shopping

CHICAGO — As the holiday season approaches, consumers are focusing on value as inflation continues to weigh on their wallets.

Food and beverage prices in October increased 1.4 percent vs. September, and while overall food inflation has stabilized in the past three months compared to a year ago, consumers are using multiple tactics to reduce spending in pressured times, according to IRI's new report, October 2022 Price Check: Tracking Retail Food and Beverage Inflation.

The tactics consumers are using include switching to private labels, trading out of expensive food categories, trading down to mainstream and value brands, and consuming more at home vs. away from home.

"As overall food inflation continued to increase from September, consumers are trading down on several products such as detergents and frozen meals, and are moving to value items," said Krishnakumar Davey, president of Thought Leadership for CPG and Retail, IRI and NPD. "With the holidays approaching, shoppers are being mindful of their budgets and are looking for value. Yet, we do see some segments of consumers continuing to pay a premium for differentiated or new products. Some shoppers buy larger packs, despite higher prices, in order to get good value for money."

Key insights from the report include:

Inflation Varies Across the Store

Within the store, the perimeter, including produce and deli, has seen inflation moderate to 8.4 percent vs. the year-ago period, while center-store inflation, including snacks, frozen meals and other frozen foods, has risen every month in 2022 and is now at 14.9 percent when compared to the same time last year. 

The fresh meat and seafood, and alcohol segments are only up 4.5 percent and 5.5 percent, respectively, when compared to this time last year. Other categories, including dairy, and frozen meals and other frozen foods are up significantly (21.3 percent and 18.4 percent, respectively).

Halloween Candy Prices Spooked Consumers

Seasonal Halloween candy prices increased 13.5 percent compared to 2021, while volumes were down 2 percent due to more significant declines in the more expensive chocolate segment (-7.9 percent volume vs. the same period last year).

Thanksgiving Will Be Expensive

Price inflation for the Thanksgiving meal is up 13.7 percent vs. last year. The hike is driven by pies and side dishes, up 19.6 percent and 18.8 percent, respectively, while protein is up 9.7 percent.

Reduction in Food & Beverage Consumption

Consumers are reducing their consumption in some food and beverage segments due to rising prices. Volumes are down more than 10 percent in categories such as frozen poultry (15.5 percent), deli service lunchmeat (11.4 percent), frozen dinners (10.9 percent) and shelf-stable dinners (10.8 percent).

IRI's October 2022 Price Check: Tracking Retail Food and Beverage Inflation report leverages point-of-sale data for October 2022 and includes data across U.S. food channels, including grocery, drug, mass market, military commissaries, select club and dollar stores, as well as e-commerce.

The inflation report can be accessed here.

Chicago-based IRI unifies technology, analytics and data to reinvent how people and companies make decisions, take action and optimize performance. It has the largest repository of purchase, media, social, causal and loyalty data, all integrated into an on-demand, cloud-based technology platform.

Earlier this year, IRI completed its merger with The NPD Group, forming a global analytics and data provider.