Upside’s Post

Interesting article on how retailers have increased prices on everyday consumer goods in the last 2-3 years. Although we've seen salaries increase significantly with inflationary pressure (c. 10-30%, depending on industry sector), has household income kept up with broad reaching retail price increases? Could the Fed have put more measures into place alongside hiking interest rates? With consumer spending slowing down and the April jobs report down to 175,000, we might be finally starting to see a softening of the labor market, boosting hopes of interest rate cuts in late summer through to the end of 2024. https://lnkd.in/eW9Q9MzB

Many Retailers are Slashing Prices. What Does That Mean For Inflation? What's Happening and How Rellevate Can Help Price reductions at all types of retailers (from grocery and drug stores, to big-box stores and even fast food) are kicking into high gear to win over consumers, but that doesn’t mean the battle against inflation has been won. Target has slashed prices on more than 1,500 items, ranging from laundry detergent to cat food to sunscreen, with thousands more price cuts expected over the summer. Online discount retailers like Temu are blowing past market expectations with a massive surge as consumers swarm these bargain-shopping apps for low-cost products. Other retailers including Amazon, Ikea, Aldi and Walgreens have also announced price reductions while fast food chains are reintroducing low-priced value meals. Some economists say that despite falling prices being a good sign, mortgage rates need to fall and employee wage growth needs to be tamed to achieve the Fed's overall 2% inflation goal. As price cuts start to hit bottom-line profitability, Rellevate’s On-Demand Pay Platform is proven to help tame wage growth by reducing payroll costs through better employee retention, morale and productivity. Rellevate’s Pay Any-Day solution works by giving cash-strapped employees the ability to receive a portion of their earned wages (at zero cost) whenever they need, thereby allowing them better cash controls, money management and overall savings tools. On-Demand Pay is Proven to Help Employers:      ✓ Save up to $10,000 per retail location (15+ employees)     ✓ Increase morale and workplace productivity by up to 72%     ✓ Increase employee retention by up to 36% #Inflation #RetailPrices #ConsumerTrends #RetailWars #DiscountShopping #EarnedWageAccess #EWA #RellevateOnDemandPay #PayAnyDayAdvantage

This is an excellent article, which highlights the dynamics at play with cost increases over the last few years. Bottom line takeaway is that as much as we are tempted to try to regulate prices, it is better to let the markets bring prices back into equilibrium. Cost increases are a signal to producers to increase supply, which eventually brings it back into equilibrium with demand. Wage increases, which are positive for workers, have also contributed to cost increases. The same market dynamics help keep wages in balance overall. The most important thing is to make sure that markets remain competitive and there is not a concentration of providers, so anti trust action, and policies that encourage more entrants into industries also remain important. For the most part this is the path that we have been following, which has resulting in a fairly rapid moderation of inflation, though prices remain higher than they were before the pandemic. With continuation of these policies, as well as the cooling of the economy and labor market, I would expect many prices, particularly in competitive markets, to flatten (aka, zero inflation), or even decrease in some cases. Price controls or similar interventions would be counterproductive, especially at this point! https://lnkd.in/gzSgTViR

What's really behind grocery price inflation? We’ve all felt the pinch at the checkout, with grocery prices up over 25% since 2020. It’s tempting to point fingers at corporate greed, but the truth is more complicated: higher wages, supply chain chaos, and rising costs for basic materials are all part of the story. This isn’t just about rising costs—it’s also about how the job market is evolving. As wages go up, especially for essential workers in the food industry, companies are navigating a delicate balance between staying competitive and keeping prices manageable. It's a reminder that inflation impacts more than just our wallets. https://lnkd.in/evGX7b4y

Unhappy Meals. Hans Nichols Axios: "Working class voters are unhappy about President Biden's economy. That may be partly due to the price of their Happy Meals." "Why it matters: Fast food restaurants have had some of the sharpest price hikes during the Biden administration, higher than both grocery bills and gas prices." "Biden relied on working class voters to win in 2020, but high prices and high interest rates are hitting the poorest Americans the hardest. Biden is now either losing, or splitting, lower income voters, according to survey after survey. Nearly three in five Americans believe (incorrectly) that the U.S. is in recession, according to a new Harris poll for the Guardian." #fastfood #inflation McDonald's Burger King #economy #inflation #bidenomics

Inflation reporting... I'm calling 100% BS on this. * 3.6 hours of work for a week's worth of groceries, today as it was in 2019. This does not compute given the near-stagnant wage growth and inflation up. That is what I dispute - not the rising costs, but the assertion that wages have kept pace. "The White House report says it takes about 3.6 working hours for an average, nonmanagerial employee to buy a week’s worth of groceries – the same amount of hours required in 2019." This is from 5/5/24 on Yahoo Finance, "As of March 2024, food prices have increased 25.8% since November 2020. This means that a basket of groceries that cost $100 in November 2020 would now cost $125.80." https://lnkd.in/eiX3JENG

If you're curious about the future of 'treat yourself' consumer spending and how retailers can capitalize on it, reach out to book a session: https://lnkd.in/eeDpTmw3

#productivity #labourcosts #20241q1 – Sectoral productivity and more importantly sectoral labour costs should be a key focus not the aggregate. The top left chart shows the increase in the annual compensation per hour with major gains in the distribution sectors. However, starting points are partially a factor. Business sector goods gains are well below the aggregate. The more interesting (to me at least) is the unit labour cost (ULC) measures (row 2 left) which are declining in most sectors except for wholesale and retail trade. Note that accommodation and food is weak. The ULC measure brings output into the picture (look at Note to readers in the Daily). The annual change (decline) in labour productivity seems to be easing (bottom left). Output is part of the reason. The top right chart shows the GDP weaknesses in many sectors, particularly goods. Note how retail and wholesale are softening. Compensation per hour worked by sector is shown for several recent quarters and for 2019-q1 (row2 right). Again, except for wholesale and retail trade, the growth rates are broadly softening. The bottom right key chart shows that ULC measures are moderating from 2 years ago. The detailed charts include quarterly change analysis. The ULC chart (p3 bottom) highlights the pops in wholesale and retail. A ULC comparison 20190q4 (annualized) (p4 top) shows that retail trade has fallen behind CPI. By this measure, the broad financial sector should also not crow. https://lnkd.in/gg8mVHQB AI not used, the interpretation, errors and boredom should be attributed to Paul Jacobson

Wages in the retail sector hit record levels in Q2 2024, according to ONS labour market statistics released today.   Average weekly earnings in the retail industry increased 6% to £689.57 in Q2 2024, from £649.61 the previous quarter, driven by increased competition to attract and retain staff and the rise in national minimum wage in April.   However, with the labour market cooling, this should ease pressure on wages. Plus, the hope is that improving consumer confidence boosts consumer spending, which will help to reduce financial pressures faced by retailers.   Read more here: https://lnkd.in/eSUipiz9 RSM UK Consumer HQ I Lisa Alty I Saxon Moseley I Chris Tate I Hannah McCarthy

US Inflation Eases A monthly metric that is preferred by the Federal Reserve in tracking inflation showed prices rising at an annual rate of 2.5% in June, down from 2.6% in May and reflecting a general easing of inflation so far in 2024. The Commerce Department’s latest personal consumption expenditures report could figure into future Fed thinking about potential cuts in its prime lending rates. The Fed’s next rate-setting meeting is slated for July 30-31, but analysts including Oxford Economics were standing by predictions that a rate cut won’t be made until the September meeting at the earliest. “The subdued rise in prices will give the Federal Reserve greater confidence that inflation is on track to moderate toward its 2% target,” Oxford Deputy U.S. Chief Economist Michael Pearce said in a statement. “While we are not expecting the news to be quite as good in coming months, we think it would take a nasty upward surprise to inflation between now and September to derail the Fed from cutting rates at that meeting.” The latest Commerce Department number was below the Labor Department’s better known consumer price index figure released earlier this month, based on different criteria and showing annual inflation at 3% in June, down from 3.3% in May and far below the peak 9.1% in June 2022. Pearce noted the latest Commerce Department numbers also showed consumer spending rose at a “solid pace” in June, and the research firm expects that to continue over the second half of 2024 “as real income growth holds up and the surge in household wealth keeps saving rates low.” The government’s latest figures showed personal household income in June rose 0.2% on a month-over-month basis, down from 0.4% growth in May. Personal spending increased 0.3% on a monthly basis, down from 0.4% growth in May.