Consumers Focused on Cost Cutting Amid Rise in Price of Staples

Brand Names Snubbed

Responding to rising prices that are now affecting everyday items, consumers are changing their buying habits. With inflation seeming to hit every line item in their budgets, many consumers are cutting back on the purchase of essentials while seeking out lower-cost alternatives.

Well known names are increasingly being snubbed in favor of cheaper, store-labeled brands for products such as laundry detergent and diapers. Discount retailers like Dollar General (DG) are also winning the attention of some budget-minded consumers.

Pandemic Behavior

Until recently, consumer staples were resistant to the price increases that seemed to affect everything else. With inflation now at a lofty 7.9%, higher prices are starting to creep into things we need and commonly use around the household like food and cleaning products.

As the pandemic kept people at home, money previously earmarked for commuting and travel were redeployed to higher-end basics. With people now venturing outdoors more often, demand is falling for those more expensive items.

Consumer Product Company Optimism

Consumer product companies, such as Procter & Gamble (PG) and Kraft Heinz (KHC), have been hit by rising costs due to supply chain disruptions. These firms have largely attempted to maintain profit margins by passing along some of these costs to the consumer. Others like Clorox (CLX) are dealing with diminished demand for things like sanitizing wipes and other cleaning products as COVID-19 restrictions ease.

These companies are betting on steady demand for these consumer mainstays despite the price increases. Instead, they may witness market share loss as the budget conscious bag up bargain brands.

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