Consumers are increasingly pushing back against price increases — and winning | AP News
Inflation has been reshaping the way Americans shop, and now those shifting consumer habits play a significant role in curbing inflation. Frustrated by prices that remain substantially higher—about 19% on average—than pre-pandemic levels, consumers fight back in various ways. They’re turning away from name brands to opt for store-brand items, choosing discount stores, or simply reducing purchases of items like snacks and gourmet foods. The impact is noticeable across different sectors, with more people opting for used cars over new ones, prompting dealers to offer discounts on new vehicles.
This consumer pushback, particularly against what’s seen as price-gouging, has prompted a response from large food companies, slowing down their price increases. While this doesn’t mean prices will revert to pre-pandemic levels, the moderation in price hikes is expected to help cool overall inflation, which has declined from 9.1% in 2022 to 3.1%. The frustration with high prices has become a central issue, even in political spheres, as President Joe Biden’s administration criticizes corporations for excessive pricing tactics.
The phenomenon known as shrinkflation—wherein companies reduce product sizes instead of increasing prices—is also under scrutiny. Biden has denounced shrinkflation as a rip-off, echoing concerns that some companies are exploiting inflation to boost profits. However, consumer resistance seems to be having an impact, leading many economists to believe that inflation might continue to ease, contrary to fears of a spiraling, long-term inflationary period akin to the 1970s and 80s.
One example of a consumer behavior shift is Stuart Dryden, who now opts for private-label products over branded ones due to substantial price differences. Dryden’s experience highlights a broader trend where consumers are becoming more price-conscious and willing to explore cheaper alternatives. This shift in consumer behavior is causing companies to reconsider their pricing strategies, with many planning to rein in price increases and focus on boosting sales instead……….
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How does consumer behavior, like opting for private-label products over branded ones, influence companies’ pricing strategies?
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When consumers choose private-label products over branded ones, the companies may reduce or increase the pricing of the product depending on how well the products sells to continue being in business and competition. They could lower the prices by having a sale or giving a discount to attract consumers or even upcharge to project that the product is exclusive, has higher value and quality.