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Americans are increasingly shopping at discount stores

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American consumers are increasingly shopping at discount stores, according to new data, as inflation remains relatively high.

Transactions at discount stores like Dollar Tree (DLTR), Dollar General (DG), and Five Below (FIVE) were up a whopping 65% this year compared to pre-COVID 2019, as of Nov. 14, according to data from Facteus, a company that tracks credit card and debit card transaction data.

Looking at a longer time period through the year, consumers have been ramping up shopping trips to discount stores, as seen in the graphic above (green line).

Conversely, department store transactions at places like Target (TGT) and Walmart (WMT) were only up 38% this year as compared to 2019, followed by 35% at wholesale clubs like Costco (COST) and Sam's Club.

Customers shop at a Dollar Tree store on March 04, 2021 in Chicago. (Photo by Scott Olson/Getty Images)
Customers shop at a Dollar Tree store on March 04, 2021 in Chicago. (Photo by Scott Olson/Getty Images)

Inevitable inflation

Inflation in America reached a 30-year high in October: The Consumer Price Index (CPI) increased by 6.2% in October as compared to the previous year, the largest 12-month increase since November 1990.

Leaving out food and energy prices — both considered to be more volatile — the index rose by 4.6% over the same duration and saw the biggest jump since 1991. Electronics and appliance stores saw a big increase in sales.

Nevertheless, retailers like Walmart report earnings are still beating expectations as consumer spending seems to be strong through the holiday season despite costs concerns.

Retail sales jumped 1.7% in October as compared to the month before, according to the Commerce Department. That was the largest gain since March, and the third straight month that the number grew.

The Facteus data suggests that many consumers are keen on seeking lower prices — at discount stores — as effects of government stimulus wear off.

And even as consumers turn to low-cost options like Dollar Tree amid rising inflation, the retailer who sells goods for a dollar has been forced to hike prices due to prevailing conditions.

In late September, the company said it was hiking prices to slightly above $1 in some stores.

Aarthi is a reporter for Yahoo Finance. She can be reached at aarthi@yahoofinance.com. Follow her on Twitter @aarthiswami.

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