The consumer giants say that greedflation in grocery prices has reached its end in the US and Europe. Consumers are already, after a three-year stretch of rising food costs, looking at cheaper off-brand and private labels as a way to get better value.

While supermarkets, manufacturers, and fast-food chains will increase promotions to get customers through the doors, it is not uniform. Profit margins are under pressure due to ongoing consumer strain.

The US consumers excluding the most wealthy ones are struggling with persistent inflation and high borrowing costs. European consumers are also affected but seem to be holding up slightly better, though their confidence is threatened by similar issues.

The term “value-seeking” shoppers are trending, indicating that everyday items like coffee creamers and candy are considered too expensive.

Companies are struggling to implement price increases like they did in 2022 and 2023. Inflation is easing back to historic low-single-digit levels, with refrigerated, frozen, and general foods seeing significant declines. Nestle SA has reduced its full-year outlook as a result.

MNCs like PepsiCo are becoming more conscious of delivering value to their customers. Procter & Gamble is offering deals on juice sales of everyday brands, including Pampers and Ariel, a reflection of weak performance in baby care.

This poses challenges for manufacturers with weaker brands or less frequently purchased products. Retailers are also responding to lower food price inflation by promoting deals.

Walmart increased grocery deals by 45% year-over-year, Target is cutting prices on 5,000 items, and fast food chains like McDonald’s are offering value meals to attract customers.

Shrinkflation—the trend of reducing the size of products while keeping prices—is reversing. For instance, Chipotle will spend $50 million to ensure larger portion sizes.

Although volumes have stopped falling across much of the industry, it’s unclear whether sales will rise. Consumers who defect to discount supermarkets or private-label goods may never go back to old buying habits, and their own brands are still gaining share in the US.

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