Middle-class shoppers, hit by decades-long high inflation, turned to discount supermarkets, which boosted sales at Walmart and Dollar General.
Although inflation has fallen to 7.7%, it remains stubbornly high as Americans have felt the pain at grocery stores, with many opting to seek out better deals.
While bread and milk are $4.79 and $8.99 respectively at upscale Whole Foods, the same items are nearly half the price at Walmart, and even less at Dollar General.
Similar savings can be seen with a pair of steaks, which cost nearly $32 at Whole Foods, while Walmart sells it for $16.77 and Dollar General for just $9. When it comes to a dozen eggs, the price at Whole Foods is around $5.49, Walmart sells them for $3.23, and at Whole Foods they cost $5.49.
Meanwhile, butter is $9.99 at Wholefoods, where it’s only $4.48 at Walmart and $4.45 at Dollar General. And flour costs about $6.39 at Whole Foods, where it’s priced at $3.83 at Walmart and $4.50 at Dollar General.
On Tuesday, Walmart reported annual U.S. sales growth of 8.2% from a year ago, beating Wall Street expectations as shares climbed 7% by midday.
The company noted that about 75% of Walmart’s sales growth was fueled by households earning $100,000 a year, demonstrating the middle class flight to its stores for better deals.
GlobalData Retail analyst Neil Saunders told CNN: “Although times are tougher, consumers’ desire for value and low price plays into Walmart’s hands.”
Dollar General, which boasts of regular low prices, has also seen an influx of wealthier spenders due to inflation, with its stock up nearly 4% on Tuesday and 12.66% on the year. last.
More middle-class shoppers are heading to Walmart, Dollar General and other discount stores for better deals on groceries to save money amid soaring inflation
Annual consumer inflation fell below 8% last month for the first time in eight months
With U.S. annual sales growth of 8.2% over last year, Walmart attributed its latest success to an influx of wealthier shoppers seeking deals amid high inflation. . Pictured are shoppers at a Walmart in Brunswick, New Jersey
Along with the sales growth, Walmart noted in its Tuesday report that its own private label sales have also increased, signaling that customers are choosing to avoid splurging on branded items to save at checkout.
The store also saw a significant three-month increase thanks to its “back-to-school season” promotions in the United States.
Walmart chief financial officer John David Rainey told CNBC that the increase in shopping at the company’s stores reflects the reality of Americans always strapped for cash.
“Wallets are stretched,” he said. “People have less discretionary income or less disposable income to spend on things – and so they’re looking for value.”
Dollar General cited a similar effect, but the supermarket chain’s locations in Ohio are under scrutiny for allegedly taking advantage of people looking for better deals.
In early November, Ohio Attorney General Dave Yost accused at least 20 stores in the state of price gouging, with inspectors finding up to 88% cheaper on the shelves than on the actual checkout line .
“Ohioans can ill afford businesses that lure people in with the promise of low prices only to fool them at checkout,” Yost said in a statement. “It looks like a company trying to make extra money and hoping no one notices.”
On Monday, five stores in Franklin County, Ohio failed a second inspection for price gouging, NBC 4 reported.
Overall, food and beverage prices across the country have climbed 11.2% over the past year due to inflation, with meat and poultry prices rising 9 % and dairy products by nearly 16%.
Walmart shares rose as the retailer saw its value jump more than 2% on Tuesday after rising steadily for the past six months
Dollar General saw similar success, with its stock up nearly 4%
While Dollar General said it has also attracted wealthier customers, the chain’s Ohio branches are under scrutiny for allegedly price gouging amid leak for better deals .
The consumer price index rose 7.7% in October from a year ago, marking the fourth consecutive month of decline from the 40-year high of 9.1% reached in June.
The producer price index for final demand, which measures inflation before it reaches consumers, rose just 8% in October from a year ago, also marking the fourth straight month that the number has fallen, the Labor Department said Tuesday.
Core inflation, excluding volatile food and energy prices, fell to 6.3% on an annual basis, after hitting a four-decade high of 6.6% in September.
The numbers were all lower than economists had expected and Wall Street reacted positively, with all three major indexes up since the report.
The producer price index for final demand, which measures inflation before it reaches consumers, rose 8% in October from a year ago for its fourth straight month of decline
The Dow Jones jumped again on Tuesday, adding to the recent five-day rally seen
But with spending returning to labor-intensive services and the labor market still tight, wage pressures could keep inflation painfully high for some time.
Earlier this month, the Fed made a fourth consecutive 75 basis point interest rate hike and said its fight to bring inflation down to the U.S. central bank’s 2% target would require further increased borrowing costs.
However, the Fed has signaled that it may be approaching an inflection point in what has become the fastest rate hike cycle since the 1980s.
Traders are now pricing in a 91% chance of a 50 basis point rate hike at the December Fed meeting.
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