The Effects of Inflation on Groceries

Rising costs, raising prices: the sad reality in which many retailers find themselves at the moment. According to the Bureau of Labor Statistics, and, as measured by the consumer price index, the annual inflation rate was 8.6% in May, the highest level since 1981.

WHAT IS INFLATION? In the simplest terms, inflation is a tool that is used to measure a general increase in the prices of goods and services in an economy. It is a complex situation that is influenced at the most fundamental level by supply and demand, which are factors driven by geopolitics, consumer psychology, and supply chain disruptions, amid a plethora of economic forces.

WHAT HAPPENS WHEN INFLATION IS HIGH? The impact of inflation is clear: higher prices for basic goods and services erode purchasing power and hurt society as a whole. When the inflation rate rises, the costs of raw materials go up, forcing growers and producers to raise the prices at which they sell their goods to retailers. This has a domino effect because when the prices of the products they source from their suppliers go up, retailers are forced to raise the prices at which they sell them as well to keep their doors open. 

WHAT ARE WE DOING ABOUT IT? As our suppliers raise prices, the margin we apply to products to cover our overhead costs (e.g. mortgage payments, staff wages, packaging materials) is eroded, and we face difficult decisions. In isolated cases, we can absorb these increases for a limited time; however, with the effects of inflation sweeping each and every supplier accompanied by our commitment to fiscal responsibility, we unfortunately can’t avoid the matter. Right now, our top priority is keeping prices low on staple products that are cornerstones of healthy, local-focused diets. While we are a small chain with limited buying power, it’s not all doom and gloom. We have a robust support system in the form of our partnership with National Co+op Grocers. They negotiate prices on behalf of over 150 co-ops nationwide and have helped us secure contracts with distributors that allow us to buy quality products at competitive prices. On top of that, local suppliers are less impacted by rising fuel costs, so our focus on local is another strength and differentiator. Add to this our marketing team’s ingenuity in finding ways to provide discounts and coupons to our customers, and we are rather resilient.

WHAT CAN YOU DO? In many ways, our focus on local suppliers will insulate us from the effects of inflation, but one thing is certain, the people at the heart of the co-op—the staff and the community—have the resources to deal with the effects, and they will keep the place strong, vibrant, and value-driven into the future. 

Here are a few things you can do to minimize the impact of inflation:

• Seek out sales and coupons

• Join our email list or follow us on social media so you don’t miss department-wide sales and promotions

• Shop Co+op Basics, our line of essentials offered at everyday low prices

• Choose local brands over national ones so your money stays in our community

• Buy from our Bulk Department instead of pre-packaged items since the cost can be higher

• Take advantage of our special order program to secure bulk prices and access products we don’t sell in store

• Give feedback on our product selection so we can bring in more of what you want to buy if it’s not already carried

• Meal plan so you can create a monthly grocery budget

• Use our Declining Balance Spending Tool to stick to help you stick to your monthly grocery budget

• Use our online shopping tool to estimate how much a grocery trip will cost since the cost of products in-store vs. online is the same

• Use curbside pickup to avoid the temptation of adding more to your cart

This article was originally published in the July/August 2022 issue of our bi-monthly newsletter, The Morsel. If you’d like to read more stories like this one and stay up to date on the latest co-op news and events, pick up a print copy in-store on your next grocery run or find more news on our website here.

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