Food prices have been on the rise and supermarkets are stockpiling inventory as a result, The Wall Street Journal reported.
Prices are expected to rise even further and grocery stores are storing supplies to meet demand, keep costs down and protect profit margins, the WSJ reported. Some grocery industry executives told the WSJ that the price increases might be among the highest seen in recent history.
Stockpiling items can lead to shortages and a disruption in the already impacted U.S. supply chain, executives told the WSJ. (RELATED: Biden Walks Away From Question About Rising Prices For Americans)
Associated Wholesale Grocers Inc., the nation’s largest wholesaler for over 3,000 supermarkets, has purchased 15% to 20% more inventory when compared to 2020, according to CEO David Smith, the WSJ reported.
Price changes are bigger and more broad than recent years, which have been minor and more specific in the past, executives told the WSJ.
Seniors shop for groceries during special hours open to seniors and the disabled only at Northgate Gonzalez Market, a Hispanic specialty supermarket, on March 19, 2020 in Los Angeles, California. (Photo by Mario Tama/Getty Images)
General Mills Inc., Campbell Soup Co. and J.M. Smucker Co. are brands who have raised prices to make up for higher costs, the WSJ reported. Some supermarkets say they pass along the increase in prices to shoppers, while others say they keep prices down to compete with discount sellers.
One retailer based in Grand Rapids, Michigan, said they are stockpiling about 20%-25% more groceries in response to warnings from over 100 suppliers that they planned to raise prices, the WSJ reported.
“When you have a uniquely inflationary period like now, it’s a feeding frenzy,” Tony Sarsam, chief executive officer of SpartanNash Co., told the WSJ.
When stockpiling retailers walk a fine line when deciding what and how much to purchase, including taking into account shelf life, storage space and competitor prices, the WSJ reported.
“If Walmart raises prices, so will we,” Mark Griffin, president of B&R Stores Inc., told the WSJ.
Along with rising wholesale prices, consumer prices have also been on the rise with the fastest pace of inflation since 2008. This is also largely in part to the reopening of the economy after COVID-19 lockdowns.
The prices of several commodities have risen quickly over the past year, including lumber, gasoline, steel, copper, computer chips, homes and home appliances.
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