If you have gone grocery shopping lately then you may have noticed that food prices have fallen drastically. If you are a consumer this is music to your ears, but to big super market chains like Kroger, Ralphs and Harris Teeter, it is not news that you want to hear. The main reason for all of this is food deflation, mainly because of weak global demand and excess food supply because of technological advances that are producing food so fast the supply is outweighing the demand. The price of some of the main commodities like cocoa and corn have fallen by more than 10%, wheat by around 20% and cattle has decreased the most at around 30%. Overall for our consumers this decrease in food prices is a good thing but in the end will leave to manufactures stocks to fall and a lot of food will be wasted due to the excess supply.
http://money.cnn.com/2016/09/09/investing/kroger-food-prices-deflation-commodity-supermarkets/index.html?iid=SF_LN
With grocery shopping prices falling it has to be affecting the inflation rate, this could also be affecting the unemployment rate for grocery stores, which is interesting to see because our unemployment rate is so low.
ReplyDeleteIf consumers are spending less of their income on food, they will either spend more on other goods or save the money. There could be a slight shift in their basket if they spend less on food and more in other categories like housing and transportation.
ReplyDeleteIts possible that there will be a shift in their basket because the demand of consumers changes. They'll spend more depending on what they need at a certain time.
ReplyDeleteIt is comes as a surprise to me that even though global population is increasing at a pretty high rate, the demand for food is not as high as one would assume. It shows how far technology really has brought us. Also, another interesting thing in the article was how Amazon is trying to enter the grocery market by starting home delivery even at a time when prices for food items are falling.
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