Perceptions of food and financial insecurity are at the highest rate since August 2023, according to a Dunnhumby consumer survey. The data found that 35% of American families with children skipped a meal in the last month due to financial reasons.
Overall, 28.5% of American consumers reported reducing their meal size or skipping meals due to economic hardship, according to the report.
The quarterly report, now in its third year, also found consumers perceive food-at-home inflation is 19.4%, 16.7 points higher than its actual 2.7% in August of 2.7%, which is the fastest increase of grocery inflation in two years. Families with income under $25,000 perceive it to be higher at 24.8%.
“Two years ago, during high inflation, we noted that many American families were struggling with food and financial pressures – particularly those with children and adults aged 18 to 44,” said Matt O’Grady, president of the Americas for Dunnhumby. “Unfortunately, we’re now seeing similar concerning trends emerge again, and families are having to adjust their shopping habits and spending priorities as a result.”
The study found that factors such as product availability, low prices, and attentive staff are increasingly important to U.S. shoppers, with 78% preferring an easy-to-shop website, up 2.1% since the May report. Two-thirds are seeking one-stop shopping, up 2%, and 71% are prioritizing low base price purchases amid high good prices.
Dunnhumby found 62% of consumers are shopping at stores with low opening prices, compared to 60% in the May data. One in four will shop online first to see who has the best prices before they head to the store. One in three consumers looking to save money are cutting back on organic food purchases that typically have a higher price, the report notes.
Dollar Stores, specifically Dollar Tree, are among the biggest winners in the low-price hunt over the past year. Dunnhumby found that among the lowest-income families, Dollar stores surpassed discounters like Walmart and Aldi and wholesale clubs as their low-price go-to retailer. Consumers said they favor the $1.50 opening price point at Dollar Tree, even though the retailer has raised that price twice in the past few years.
Most items at Dollar Tree were priced at $1 before 2021, when opening prices increased to $1.25. In June, Dollar Tree raised opening prices on most items to $1.50 or $1.75, citing inflation and tariffs.
Packaged food prices have stayed elevated even though overall inflation has come down over the past year. Food prices in August rose another 3.2% from a year ago. Grocery prices rose 2.7%, while restaurant menu prices increased 3.9% year over year.
All six major grocery store food group indexes increased in August, according to the Sept. 11 Consumer Price Index (CPI) report. The meats, poultry, fish, and eggs index rose 5.6% over the last 12 months. Ground beef prices averaged $6.31 per pound in August, up 13.2% from $5.57 a year ago. Over the past two years, hamburger meat prices have risen 24.4%, according to the Federal Reserve Bank of St. Louis.
Prices for fruits and vegetables also rose higher in August, with tomato prices up 4.6% year over year. Apple prices were nearly 2% more expensive, as were dairy, cereals, and dry grocery prices in the recent CPI report.
High food prices are just part of the problem for low-income families. The cost of utilities and other services are also elevated. Economists at Wells Fargo Securities said it’s the cumulative inflation impact on households that is taking a toll on consumer sentiment.
The University of Michigan’s Consumer Sentiment Index fell 5.3% to 55.1 in September, down from 58.2 in August, and 21.6% lower than a year ago when the reading was 70.3. Economic expectations slid 7.5% in September from the previous month, but were 30.6% lower than a year ago.
September’s sentiment decline was seen across a broad swath of the population, and by income and education, noted economist Joanne Hsu, director of Michigan’s Survey of Consumers. One key exception was seen among consumers with larger stock market holdings, where sentiment held firm from last month.