The trend: Prices increased by 7.5% over the past 12 months, the highest growth rate since 1982, per the latest Consumer Price Index (CPI).
How retailers have responded: Retailers have multiple strategies to mitigate the effects of inflation on their business. They can:
More than half (56%) of retailers have raised prices beyond inflation to boost profits, while 55% have increased their prices by 20% or more, per a November 2021 survey from Digital.com.
Grocers run into problems: However, when it comes to groceries, consumers are exhibiting more price-conscious behavior, thanks to higher prices for everything from eggs to meat.
The big takeaway: While companies have been vocal about the impact of inflation on their business, the reality is that most have still been able to record profits. For example, Coca-Cola reported 17% revenue growth for 2021, as well as a 15% increase in operating income. This means there’s room for retailers and manufacturers to negotiate prices downward or at least keep them steady, thus relieving some of the pressures on consumers.
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