Consumers are beginning to take control amid a period of growing inflation, with many turning to store brands as a way to combat rising prices. This shift is causing a decline in sales volumes for name brands, forcing companies to find a way to balance profits and sales. With food prices rising by 25% due to cumulative inflation, consumers are feeling the pinch and are looking for ways to save money.
The University of Michigan’s Consumer Sentiment Survey for May shows a significant drop in overall consumer sentiment, with current and expected conditions both at around 67, a level typically associated with a weak economy and recession. Despite this, Federal Reserve Chair Powell seems optimistic, cutting back on measures to reduce the money supply that contributed to the current inflationary cycle. Consumers are feeling the effects of high inflation more acutely than the Fed’s focus on the 12-month inflation rate.
Consumers are demonstrating an anti-inflation attitude, with many looking for ways to cut costs and combat rising prices. The shift to store brands is one way they are doing this, with many seeing potential savings of up to 10%. The focus for corporations now needs to be on sound business management to adjust to this new consumer behavior, putting stock prices and executive bonuses on hold in favor of long-term sustainability.
As consumers continue to navigate the challenges of high inflation, it is clear that they are driving the conversation around economic conditions. The compounding effects of inflation, as well as the impact on household budgets, are leading many to seek out alternative ways to manage their finances. Companies will need to adapt to this changing consumer behavior to remain competitive and maintain profitability in this challenging environment.
