Discount stores raising prices at higher rate amid inflation

·2 min read

Sheri Thompson is struggling to stretch her family's weekly $200 food budget with grocery prices nationwide up 13.5% since last August.

"My grandson, he comes in and he says, 'Nana, we should be on lunchtime by now.' And I said, 'No. We actually skipped lunch. We're on dinner,'" Thompson said.

She shops for groceries at Dollar General, where new data suggests overall prices are up almost 24%, according to Numerator. At nearby ALDI, prices are up nearly 17%.

Both discount stores are often relied on by families in lower income neighborhoods.

Leo Feler, chief economist at Numerator, which tracks hundreds of millions of shopping receipts, says food inflation is hitting lower income people disproportionately because higher income communities have more options.

"You can go from a Whole Foods to a Walmart, from a Walmart to a Dollar General," Feler said. "Once you're a low income consumer, you are already at the cheapest place that you can possibly buy food. And that just means that these stores have more pricing power."

Discount stores raised prices for meat, poultry, fish, eggs and dairy products at a higher rate compared to many other grocers.

Milk prices at a single Dollar General store in Texas shot up 20% over a year ago.

"Like many other retailers, we have been forced to pass along certain product cost increases, although not of the magnitude suggested by Numerator," Dollar General said in a statement to CBS News.

ALDI did not respond to a request for comment.

Still, discounters are cheaper than most other supermarkets that can only jack up prices so high.

"You can't raise prices if people are going to shift away from you," Feler said. "Except at a Dollar General or ALDI, people aren't shifting away. More people are still coming to these stores, despite the higher prices."

Researchers also found that when grocery money starts to run out, cash-strapped consumers turn to less healthy options, like dollar menus at fast food restaurants.

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