Posts Tagged “grocery inflation”

Double-Digit Inflation for Produce Shows No Signs of Slowing Down

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Fresh produce prices are up, and the majority of consumers are concerned about the rising cost of their food and beverage bill, including fruits and vegetables.

That’s according to the March 2022 fresh produce report titled “Inflation Remained the Big Story for Fresh Produce in February 2022,” from IRI and 210 Analytics.

The report, covering the four weeks ending Feb. 27, shows that, while dollar sales are “looking good,” the “volume pressure is real,” 210 Analytics President Anne-Marie Roerink told The Packer in an email. “Combined fruit/vegetable inflation is now trending in the double digits with no signs of slowing down any time soon.”

Measuring multi-outlet stores in the U.S., including supermarkets, club, mass, supercenter, drug, military and other retail food stores in February, market research company IRI found continued grocery price inflation over and above the elevated 2020 and 2021 levels. In February 2022, the average price per unit across all foods and beverages was up 10.3% versus the same weeks in 2021, and up 16.8% versus February 2020.

“In our February IRI shopper survey, we found that 90% of shoppers have noticed the price increases across the various grocery departments and a whopping 96% of those consumers are concerned about it,” Jonna Parker, team lead for IRI, said in the report. “In response, 75% of consumers have already made one or more changes to their grocery shopping, up considerably from 64% in January 2022.”

Fresh produce prices are elevated over last year and at a slightly higher rate than total food and beverages, reported Roerink, noting that in February 2022, the price per pound for total fresh produce increased by 10.9% over February 2021. “The latest 52-week look was lower, at 7.6%, given the much milder inflation in the second quarter of 2021,” she reported.

While fruit inflation reached its highest level yet (up 16.1%) in February, fresh vegetable inflation was far below average (up 6.2%), according to IRI data.

“Fresh produce inflation reached double digits and consumers’ concern over these kinds of price increases is shared by the industry,” said Joe Watson, vice president of retail, foodservice and wholesale for the International Fresh Produce Association. “Consumers are focused on finding good prices and promotions and minimizing waste at home, which puts great emphasis on freshness and shelf life in the store. At the same time, consumers balance their spending across canned, frozen and fresh purchases, and many simply buy less to stick to their budgets. Many of the measures pressure volume sales.”

Fresh produce sales reached $5.6 billion in February 2022, and while this figure surpasses the record set in 2021, dollar gains were inflation-boosted and units and volume sales declined year on year, reported Roerink.

“We certainly have to acknowledge that big price increases tend to pressure volume sales,” said Watson. “But it is also important to note that it is hard to measure the effect of supply chain disruption: we cannot sell what we do not have. Out-of-stocks have been a severe problem for departments across the store since the start of the pandemic and fresh produce has also been affected by the labor, transportation and other supply chain issues. Actively communicating and providing recommendations for alternatives are important best practices in case of out-of-stocks.” 

A deeper dive into dollar versus volume sales shows that fresh produce pound sales trailed behind year-ago levels all throughout 2021, according to the report. “In January 2022, pound growth dropped to its lowest level since the second quarter of 2021, and the performance worsened in February,” noted Roerink. “While dollars increased by 4.6%, volume dropped by 5.7%, creating a 10.3 percentage point gap between volume and dollars due to inflation, as well as lower levels of promoting.”

A look at the top 10 fresh produce items in terms of dollar gains further reveals rising inflationary pressure.

“The top 10 in absolute dollar gains showed that smaller sellers, limes and mixed fruit, can still be big contributors to department growth,” said Parker. “But more than anything, it shows the impact of inflation. With the exception of mixed fruit and salad kits, all top 10 growth areas had double-digit inflation, led by much higher prices year over year for limes and avocados.

“Meanwhile, salad kits continue to be strong sellers, and I think at-home lunch is an important part of that,” Parker continued. “We still have a lot more people working from home today than we did pre-pandemic and our February survey showed that salads are among the top five things people make for lunch when at home.”

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