If you’ve made a trip to the grocery store to stock up on some key summer essentials, you’ve probably noticed that your bill has ticked up in recent months.
Every aisle, from the cereal aisle to the egg and cheese coolers, are experiencing something of a price bump as suppliers struggle with higher prices.
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The most recent Consumer Price Index numbers are in for June, and they show that the cost of food overall, food at home, and food away from home (dining out, for example) rose across the board.
Here’s a look at how some prices have changed month over month:
Food: increase 0.2%Food at home: increase 0.1%Food away from home: increase 0.4%Energy: decrease 2%New vehicles: decrease 0.2%Used vehicles: decrease 1.5%Apparel: increase 0.1%Medical care service: increase 0.2%
It’s not uncommon to now see a dozen eggs selling for well over $5 per carton. A fresh gallon of whole milk on average costs over $4. And staples like flour and beef have increased in price by about 33% since early 2020.
“The index for meats, poultry, fish, and eggs rose 2.6 percent over the last 12 months and the index for other food at home increased 1.6 percent,” the CPI reports.
“Over the same period, the nonalcoholic beverages index rose 1.5 percent and the cereals and bakery products index increased 0.5 percent. In comparison, the fruits and vegetables index fell 0.5 percent over the year and the dairy and related products index declined 0.1 percent.”
Coca-Cola and Sprite soda bottles and 12-packs are seen on a grocery store shelf.
Jeff Greenberg/Getty Images
Coca-Cola sees strong results
It may sound like high prices at the grocery store spell bad news for food and beverage brands, who largely depend on pricing power to tempt customers to make nonessential purchases (a 12-pack of Coke, for example, isn’t as necessary as some other grocery staples, despite what some may believe).
But in some cases, giants like Coca-Cola (KO) have actually seen a benefit from higher than normal prices.
Coca-Cola reported second-quarter earnings on July 23 and managed to beat Wall Street’s expectations, despite customers feeling the pinch of food and beverage prices ticking higher.
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Coca-Cola’s revenue increased by 3% to $12.4 billion, compared to the expected $11.76 billion. Earnings per share ticked up 7% higher year over year, at $0.84.
“We’re expressing a confidence in our ability to deliver on the 2024 guidance … it’s really a manifestation of confidence in our long-term strategy to create brands and to be able to work with our bottling partners to execute them,” CEO James Quincey said, adding that the company is raising the rest of its full-year guidance.
Coke’s success isn’t all consumer-friendly
But just because Coca-Cola’s bottom line is happy doesn’t mean its customers are.
Quincy added that high prices across the world — not just in the United States — have affected customers. So while Coke is calling for organic revenue to increase by between 9-10%, some regions of the world are grappling with that price pinch which is largely caused by inflation.
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“You have to parse out a handful of countries that have very high inflation,” like Argentina, Quincey said “They are accounting for about half of the price mix.”
In the United States and Europe, two of Coca-Cola’s most developed markets, prices are up by about 3%.
“Inflation…is getting into the kind of normalized space,” Quincy said, suggesting Americans are getting used to paying more.
Similarly, Coca-Cola saw case volume drop by 1% in its U.S. market in Q2. Coke said the drop in sales was likely due to a declining interest in purchases away from home. Which makes sense. Food away from home is up 0.4% — even pricer than food at home, according to the most recent CPI numbers.
In an effort to regenerate interest, Coke has announced it will partner with some fast food giants to offer value meals, where customers can get a meal and a Coca-Cola beverage as a part of a limited-time special.
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