With government inflation data showing signs of slowing, many shoppers may be wondering when they'll feel some calm at the grocery store.
But experts warn that high prices will continue – especially for household brands.
This comes after a number of high-profile companies, including Pepsi, indicated that prices, which have risen sharply over the past two years, are beginning to “normalize” rather than fall.
Such companies are under no pressure to cut costs because their distinctive flavors or fan base mean they have less competition from private label brands, experts say.
Instead, consumers only resort to third-party brand alternatives for simpler products.
The price premium shoppers pay for household brands is often high. DailyMail analyzed the products offered on the Walmart website
Inflation first began rising in the US in 2021 following Russia's invasion of Ukraine. It reached its peak in June 2022 at 9.1 percent
That's one reason why Kraft Heinz sold its Planters nut business — which had a less loyal following than, say, its ketchup — to Hormel three years ago.
Arun Sundaram, an analyst at CFRA Research, told CNBC: “I think it will take some time for packaged food prices to come down.”
“The more ingredients the product contains, the greater the pricing power tends to be.”
The price premium shoppers pay for household brands is often high. For example, a 30-ounce bottle of Heinz Tomato Ketchup costs $4.76 at Walmart.
But the same-sized bottle of store-brand Great Value ketchup currently costs $1.94 on the retailer's website.
Likewise, a 2-liter bottle of Coca-Cola would set a customer back $2.74, while a Sam's Cola only costs $1.48.
Meanwhile, a 30-ounce jar of Hellman's Mayo — made by Unilever — costs $5.98 on Walmart's website, while the “Great Value” equivalent is $3.34.
Inflation first began rising in the US in 2021 following Russia's invasion of Ukraine. It reached its peak in June 2022 at 9.1 percent.
In January, the annual inflation rate was 3.1 percent – above the 2.9 percent level forecast by economists and still above the Federal Reserve's 2 percent target.
The annual inflation rate was 3.1 percent in January, down from 3.4 percent in December but still 0.2 percent higher than expected
After a period of high inflation, two trends can occur: deflation and disinflation.
Deflation means that prices fall completely – that is, the annual inflation rate falls below 0 – while disinflation means that they continue to rise, but at a more stable rate.
Late last year, Walmart CEO Doug McMillion claimed that deflation was imminent for a number of key grocery items.
However, the retailer appears to have already reneged on this promise.
Chief Financial Officer John David Rainey told CNBC: “There is deflation in certain categories – the possibility still exists overall – but prices are more stable than they were three months ago.”
Similarly, Gregory Daco, chief economist at EY, told the outlet: “Outside of recessions or severe recessions, you rarely see prices fall consistently.”
In a recent earnings call, Home Depot bosses said prices of their items had “steadied” and had not fallen.
On a conference call earlier this month, McDonald's CEO Chris Kempczinski admitted that consumers earning less than $45,000 a year are spending less at restaurants
Similarly, Pepsi CEO Ramon Laguart said in a recent earnings call that the company would not increase costs beyond “normal pricing levels.”
Many companies have blamed high inflation for dampening their sales this year.
McDonald's CEO Chris Kempczinski admitted that consumers earning less than $45,000 a year were spending less at restaurants.
“Eating at home has become more affordable,” he said.
“The battleground is certainly with that low-income consumer. “I think what you're going to see as we head into 2024 is probably more attention to what I would call affordability.”
McDonald's raised U.S. menu prices by about 10 percent in 2023 and implemented similar increases the year before.
The chain came under fire last year after one of its truck stops in Connecticut was exposed for selling a Big Mac meal for $17.59.