Consumers have been slow to change their behavior, but this year, trading down is expected to accelerate, said Truist analyst Bill Chappell.
Shoppers are largely creatures of habit, but after two years of rising prices, a broader shift to private label brands is underway. Inflation doesn't appear to be going down anytime soon, although price increases have been subsiding since the June 2022 peak. The consumer price index, which measures a basket of common goods and services, rose 0.5% in January and 6.4% year over year , according to data released by the Labor Department Tuesday.
Several companies, like Kellogg and Kimberly-Clark have recently said during earnings calls that the consumer is "resilient" and that they haven't seen any trading down. "Traditionally, [what] we've seen with price increases is that there's not an immediate effect," said Greg Carlucci, senior director analyst for consumer goods at Gartner. "It is still a little early to tell as far as the impact on the unit volume of a lot of companies.
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