Roughly 78 percent of consumers plan to or have already cut overall spending on products due to inflation, reports Circana, formerly IRI and The NPD Group. Inflation is moderating, according to the April Consumer Price Index, rising only 4.9 percent from April 2022 to 2023, the smallest 12-month increase since April 2021; however, food prices rose 7.7 percent in April compared to last year, pushing consumers to be more deliberate with their food dollars.
To manage their food spending, consumers are shopping at value retailers, spending less on non-food purchases, switching to store brands, and canceling committed expenses, like subscriptions, finds Circana.
In April, general merchandise retail sales revenue fell 7 percent compared to April 2022, and unit sales fell 8 percent. Over a quarter of consumers said they’ve canceled subscriptions over the past few months, and 66 percent of those cancelations were for entertainment subscriptions, like streaming services.
“Consumers need to eat no matter what and will adapt to higher food costs by finding lower cost options or cutting back on discretionary spending, and that’s what we’re seeing play out now,” said Darren Seifer, food & beverage industry analyst at Circana, in a statement.
The April CPI shows that at-home food prices increased by 7.1 percent. To mitigate higher food prices at retail, Circana reports that 49 percent of consumers said they shop at food stores that offer lower prices, 42 percent report they buy more store brand/private label food and beverages, and 41 percent note they buy essential items only and forego impulse purchases.
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