Local grocery stores continue to cut prices of food

Thousands of local grocery stores, including Krogers, Safeway, Wegmans and Publix are actively reducing their prices and/or are holding more weekly sales. There are two main reasons they are doing this, but the biggest one is due to increasing competition from non-traditional retailers including Amazon and Wal-Mart. Another reason that prices are going down is due to deflation in many different food categories. No matter the reason, increased competition and lower prices is good news for consumers.

While prices vary nationally, and it depends on the exact make-up of the customer’s shopping cart, the Agriculture Department’s Economic Research Service reports that the cost of food at a local grocery store decreased about 1.5% last year. The trend is expected to continue in 2017 as competition is only getting more fierce.

This is of course great news for all American households, no matter their income. More places to shop at (so more choices) equals more competition equals lower prices for shoppers. Whether you make $25,000 dollars a year or $100,000, if/and when prices go down enjoy it…as it does not happen very often!

A decline of 1-2% is even more telling when considering that all other forms of consumer inflation is picking up. Last year the CPI index was starting to trend up to a positive 2% increase. This means that the price of food charged by your local grocery store is 3-4% less than the prevailing CPI rate. So this shows that this rare decline in the cost of food is even more pronounced when compared to the price of other consumer goods.

To show how competitive the grocery store industry has become, you just need to look at Kroger. This is the nation’s largest chain focused strictly on selling groceries. For 13 years this company has had increasing year over year sales at its stores. So each quarter that the average store has been opening, that location had higher sales than the previous year.

However that trend changed this past year. So Kroger same store sales actually declined for the first time in 13 years! There are many reasons that attributed to this decrease in the later half of 2016 – first part of 2017. But a big one indicated by the company was competition. More and more shoppers are using Amazon Prime, shopping at Wal-Mart, or using other companies including Aldi.

The good news for shoppers (and bad news for corporations!) is that competition may only increase. There are now more oversees companies expanding in the United States, online retailers, and other options. Read more cheap groceries.

One of the newest competitors is Aldi. They sell low cost groceries and other food items, and the corporation is building multiple distribution centers as well as opening new stores throughout 2017. Target, which itself is struggling from sales in its apparel business, is also putting an increasing emphasis on selling groceries. All of this will continue to drive down prices.

While grocery stores have lowered the cost of food around that 1.5%, there are some items that have had bigger price drops than others. The USDA reports that eggs, chicken, beef, and other meat have had price decreases larger than others. This one again is due to competition, but another big factor is the general oversupply for those staples. Farmers have too many products and they are also having trouble in exporting them…those leading to more supply in the US and lower prices at the grocery store.

So continue to look for sales throughout 2017. Even if you do not find any markdowns at the grocery store, no that the price you pay will continue to trend down…even for items that are not on sale and that are just regular price.

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