If you feel like you’re paying more every time you go to the grocery store or convenience store, you’re probably not wrong.
One of the hardest things to budget for is food, because it’s a necessity we all need and prices can skyrocket seemingly uncontrollably without any warning.
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Prices can also be notoriously finicky; Once they rise and consumers adapt to the new price of eggs, for example, it is difficult to bring them down. And even if a family decides to cut back on splurges like dining out or ordering delivery, the bill at the grocery store for even the most basic of essentials can burn a serious hole in the wallet.
According to the U.S. Department of Agriculture, 2022 saw a near-record increase in food prices of 11.4%, the largest increase since the 1980s. Its data predicts that in 2023, prices will see an increase subsequent 6.3%. Some of the most expensive items at a grocery store in recent months have been beef, olive oil, produce like peaches and oranges, and chocolate.
And the most recent Consumer Price Index (CPI) shows that prices rose more than expected, to 3.1% in total over 12 months, above the 2.9% expected by most analysts.
Here is a list of some of the biggest fluctuations from the previous month:
- Food: increase 0.3%
- Energy: increase 0.5%
- New cars: stable at 0%
- Clothes: drop of 0.7%
- Shelter: increase 0.6%
- Transportation: increase 1%
- Medical care services: increase 0.7%
For the largest food and retail companies, rising prices have been a difficult problem to solve. Do you pass on the price increase to consumers, who can then choose to buy elsewhere? Or do you absorb these expenses onto your own balance sheet, disappointing investors and reducing your own profits?
Kellogg CEO has idea to cut costs
One pantry staple that has seen a noticeable increase is cereal, the overall cost of which has increased between 10 and 15 percent year over year, depending on the brand and quantity measured. With some childhood favorite brands close to $10.99 per box in some parts of the country, it’s natural that many families are tempted to leave cereal on the shelves and opt instead for something more nutritious and more nourishing for a morning meal.
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But Kellogg’s (KLG) CEO Gary Pilnick has a different idea, instead telling America that families struggling to make ends meet should eat more grains — not less.
“The cereal category has always been quite affordable and tends to be a great destination when consumers are under pressure,” Pilnick told CNBC in February. “If you compare the cost of grain for a family versus what they could do otherwise, it will be much more affordable. »
Pressed by “Squawk on the Street” host Carl Quintanilla, if that sentiment could be wrong, Pilnick doubled down, however.
“It’s actually going really well right now,” Pilnick continued. “Dinner cereal is probably more fashionable now, and we expect that to continue as the consumer is under pressure.”
Kellogg’s has popular cereal brands like Frosted Flakes, Froot Loops, Corn Flakes, Raisin Bran. A 12-ounce box of Frosted Flakes currently costs $6.75 at a South Florida-based Publix, while a 15.9-ounce box of Raisin Bran Crunch costs $6.79 at a nearby CVS.
Kellogg’s ran an advertising campaign in 2022, telling American consumers to “give chicken the night’s rest” and instead add cereal to their nightly meal rotation. For reference, a skinless, boneless chicken breast weighing about 172 grams offers 284 calories, 53 grams of protein, and zero grams of carbs. A serving of Froot Loops, which weighs approximately 39 grams, contains 150 calories, 34 grams of carbohydrates, 12 grams of sugar and 2 grams of protein.
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