Consumers push back on price hikes
Add Axios as your preferred source to
see more of our stories on Google.
Illustration: Allie Carl/Axios
Consumers have had enough of price increases, and they're pushing back, according to reports from several consumer-centric companies today.
Why it matters: Today's Consumer Price Index report showed inflation cooling off, as the cumulative effect of price increases since the pandemic has reoriented consumer behavior.
PepsiCo CEO Ramon Laguarta today signaled that the company's price increases might've gone too far.
- "Some parts of the portfolio need value adjustments," he said of the Frito-Lay owner's snack products, adding that "for particular consumers, we need some new entry price points."
At Conagra Brands — whose products include Duncan Hines desserts, Hunt's ketchup and Swiss Miss cocoa — consumers are still adjusting to what CFO David Marberger today called "significant" price increases over the last two to three years.
- CEO Sean Connolly says shoppers of all income levels have been exhibiting "value-seeking behavior."
At Delta Air Lines, the company has benefited from a surge in travel over the last few years — but consumers aren't forking over more cash for tickets.
- In fact, airlines have been in a "race to the bottom on domestic ticket prices," WSJ reported, as excess capacity is poised to trigger what Delta CEO Ed Bastian today called "pretty significant corrective action."
What they're saying: "Consumers are more sensitive to price increases after several years of high inflation," Comerica Bank chief economist Bill Adams wrote today.
- "That is making businesses more cautious about raising prices" and, in turn, is leading to "slowing inflation," Adams continued.
Reality check: Companies may not benefit from more price hikes, but the costs of goods have largely stabilized, which could preserve their profits.
- "Businesses' input costs have been more stable in the last 18 months, reducing upstream pressure on them for price increases," Adams added.
The bottom line: Consumers who were helpless against price increases are regaining power.
