It has to do with inflation, weather, and—of course—Amazon.
2017 has been a great year for supermarket shoppers: grocery prices on staples have been at an all-time low, online food shopping is starting to take off, and Amazon’s major disruption and takeover of Whole Foods has given the entire grocery industry incentive to stay competitive, and keep costs low.
But all of that progress has come at a steep price for retailers, who’ve struggled to absorb rising costs. The cost of meat, eggs, dairy, pork and many staple crops have been steadily increasing due in part to rising oil prices in the wake of a horrible hurricane season in most of the Southeast.
However, according to the Wall Street Journal, retailers have been slow to pass the costs onto customers. The United States Labor Department reported that shoppers paid just 0.6 percent more for groceries in November than they did in November 2016, a number that reflects a gap between producer and retail prices—the widest they’ve been in more than three years.
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A significant reason for this may be the race to compete with Amazon. Many companies have put major investment into online retailing and convenience services. German-based discount retailer Aldi has joined forces with delivery service Instacart, and Target has recently purchased same-day delivery giant Shipt.
Still, it’s not likely that the low prices will continue. Several grocery executives told the Journal that they’ll eventually begin raising prices to more accurately reflect the costs.