The art of grocery shopping has evolved into a puzzling affair for people across the nation, as the cost of everyday food items skyrockets beyond expectations. 2021 marked the onset of efforts by food companies to match the rising costs by hiking prices, mostly with the supermarket’s concurrence. These price increases were the culmination of coordinated efforts between the food industry and retailers, who shared an understanding of the steep incline in input, labour, energy, and transportation costs.

However, investment analysts expressed concerns about the sustainability of this harmonious relationship as customers grew weary of the rollercoaster ride of food price inflation. Recent signals have indicated that retailers are now urging suppliers to reconsider their pricing strategies.

Feeling the pressure from suppliers, food companies have appealed to ingredient suppliers for better pricing, urging a systematic overhaul. Meanwhile, supermarket giants are pushing back on food companies, demanding either increased promotional deals or reduced prices, leveraging their control over shelf space.

Even the titans of the industry, like Walmart, are not immune to the squeeze. Walmart’s top honcho, C. Douglas McMillon, publicly acknowledged the strain high food prices are placing on their customers, while expressing hope for relief, particularly in the dry grocery and consumables categories. He emphasized the pivotal role of slashing food prices in Walmart’s overall success, noting that cost reductions in these areas would free up funds for other necessities.

The inflation of food prices is unfolding like a complex puzzle, with numerous pieces missing. The impact of inflation on everyday consumers is undeniable, with prices for items like bread, cereals, cookies, and crackers soaring by 29% to a staggering 37% compared to the pre-pandemic levels of February 2020. The collective increase in food prices has also surged by 24%, while the Consumer Price Index for all home food items climbed by 19% over the same period.

However, food companies themselves are not reaping the rewards of these heightened prices, as reflected in their financial reports, which tell a tale of significant pressure on their profit margins. Despite marginal improvement from 2021 and 2022, the companies have little room to manoeuvre when it comes to price reductions, finding themselves caught in a tight spot.

The picture is equally grim on the ingredient front, with bread and cracker ingredient costs surging by 27% and 44% respectively, compared to the same period in 2020. Wages have also experienced a stark 18% hike since February 2020.

Although slashing prices may seem like a viable solution, in reality, it would barely make a dent in the exorbitant costs. Food manufacturers are desperately trying to stay afloat, and coercing them into lowering prices will not address the underlying issues. Let’s hope that consumers recognize this predicament and ease off on demands for discounts, for the benefit of all.