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Epic Economist, 3/5/24
"Costco Products Face Explosive Price Increase
As CEO Reports A Large Number Of Challenges"
"Costco is quietly raising prices again, and this is making customers from all over the country really furious. Executives warn that even more increases are on the horizon as the company implements a series of changes this year. Higher grocery prices have been a major topic of concern for American families since the pandemic. Despite all the talk about deflation, U.S. consumers are still spending on average $1,000 more on the same basket of basic items they used to buy four years ago.
During his final days at Costco, Galanti suggested that while the warehouse club wants to offer the most competitive prices, it is not above grabbing wider margins when the right opportunity presents itself. In other words, Costco doesn't always keep its margins thin on the items it sells, but it looks to keep prices marginally lower relative to its rivals.
So far in 2024, grocery price increases have outpaced overall inflation. Families are now paying 25% more for groceries than they were prior to the pandemic, compared with 19% overall inflation. About five categories drove nearly 30% of grocery inflation. They are beef and veal, poultry; non-frozen non-carbonated juices and drinks, fresh fruits and vegetables, and snacks, according to the report.
Such elevated costs for food are hitting American families harder higher than ever before. From February 2023 to February this year, low-income families have been hit the hardest by rising grocery prices, and they have spent on average 31% of their income on food, compared with 23% for middle-class households, and only 8% for wealthier ones, data shows.
“I think people are waiting for prices to return to what they call ‘normal’ - and with the exception of a few things, - we’re not going to see that. We’re going to see prices stabilize at this level, and that’s likely it,” said Dawn Thilmany, an agricultural economist and professor at Colorado State University. That's sad news for everyone struggling to get by month after month. But that's the new reality we're in and, at the end of the day, Costco is just a small fish in a sea of vicious creatures."
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