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Have You Noticed Food Prices Have Fallen For Nine Straight Months?

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Have You Noticed Food Prices Have Fallen For Nine Straight Months?

Have you noticed that your trip to the grocery store is leaving you with a few extra dollars in your pocket?

According to a Bloomberg report, food prices have now fallen for nine straight months in the US, marking the longest streak since the 1960s with the exception of the 2009 financial crisis.

The reason for cheaper food is attributed to low oil and grain prices, not to mention intense competition from discount grocers and Wal-Mart Stores, Inc. (NYSE: WMT), which is leading the way with pushing down prices to steal market share from other grocers but at the expense of their profit margins.

Meanwhile, shares of Kroger Co (NYSE: KR) hit a new 52-week low of $29.81 on Wednesday. The company reported its Q2 results earlier this month in which sales fell short of expectations and management provided a poor outlook.

Related Link: Kroger Shares Lower As Q2 Sales Miss, Outlook Reduced

Jennifer Bartashus, analyst at Bloomberg Intelligence, said food pricing is starting to "border on irrational pricing." Stores are "lowering prices just to draw traffic, without thinking about their margins."

Either way, consumers are the big winner in a food deflation audience.

"The severity of what we're seeing is completely unprecedented," Scott Mushkin, an analyst at Wolfe Research who has studied grocery prices around the country for more than ten years told Bloomberg. "We've never seen deflation this sharp."

Posted-In: Bloomberg Food Deflation Food Prices Grocery stores Jennifer Bartashus Scott Mushkin Walmart GroceriesMedia Best of Benzinga

 

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