Price Hikes Impact 14 Popular Supermarket Categories

August 20, 2014, 04:45 pm By Meg Major, Stagnito Business Information

Price increases have sharply impacted 14 of the most heavily shopped food categories for the first half of 2014, according to a report from National Promotion Reports, whose pricing data was collected from a panel of retailers and grocery wholesalers and included nearly 14,240 items.

Of the 14 studied categories, a total of 2,363 items, or 17 percent, saw a price increase with an average 6.4 percent change, or $0.16 per unit. The average cost of an item, meanwhile, climbed from $2.49 to $2.65. 

Dairy prices – which were correctly projected to rise by government forecast following a harsh Midwest winter and limited milk output – have increased most significantly. To wit: 56 percent of all cheese items tracked took a price hit in the first half of 2014, paced by yogurt and butter/margarine.  

“We are seeing the effects as growers/farmers need to pass along higher prices," explained Bob Cristofono, VP of sales for National Promotion Reports, a New York, N.Y.-based market research firm specializing in competitive cost and promotion allowance data. In turn, the price increases tend to be passed through the supply chain and onward to consumers.

When assessing items with the steepest price increases, butter/margarine rose 9.4 percent, the highest percent change of any of the 14 studied categories. Other categories where price increases were over 8 percent include shelf-stable vegetables, juices and household cleaning products.  “When manufacturers need to take a price increase…the increases are aggressive,” added Cristofono.

The average prices tracked in the study are only for items whose price increased, although the average price is indicative of increasingly higher cost of groceries. That said, nearly all manufacturers have ongoing cost savings initiatives to either maintain critical price points or increase profitability.

“Most items in the grocery store have critical price thresholds such at $.99, $1.99, $2.99," according to Cristofono, who cautions manufacturers "to be mindful of the impact that price increases have on consumers and retailers, especially the small independents and indirect chains who purchase items from grocery wholesalers."