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Inflation has altered consumers’ buying habitsgettyYear-to-year inflation may look low, but prices continue to compound upwards. For example, “Food at home” pricing, accounting for 8% of the total CPI basket, was up 1.8% in 2024. That seemingly low inflation rate nevertheless pushed up the Covid period price inflation to 27.6%, and that is what consumers are contending with.
So, why is that a problem for companies? Because consumers’ actions to reduce the inflationary effects can adversely affect business revenues and profits. Grocery shopping is a good example. Here are examples of what consumers can do:
Switch to lower-priced brands (e.g., store brands)
Substitute alternate products (e.g., chicken for beef)
Reduce consumption (e.g., one scoop of ice cream)
Forgo disposable products (e.g., paper towels)
These actions not only affect the grocery stores, but also affect the companies that produce packaged food. The effect is measured by “volume/mix” changes caused by consumers’ altered decisions.
A good example is Kraft He …
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