Target CEO Brian Cornell says shoppers are pulling back, even on groceries, as they feel stressed about their budgets.
In an interview with CNBC’s Becky Quick that aired Thursday morning, he emphasized that the retailer has posted seven consecutive quarters of declining sales of discretionary items, such as apparel and toys, in terms of both dollars and units.
“But even in food and beverage categories, over the last few quarters, the units, the number of items they’re buying, has been declining,” he said in the interview.
For people in the lower income bands that buy at Target it’s Food inflation that counts, not the general inflation figure that’s calculated using a basket of goods and services with many things which are beyond the purchasing power of such people.
The personal inflation for such people is almost certainly higher than their wage growth.
But food inflation is at around the same level as overall inflation, so I imagine it’s close if not the same. Do you have the numbers to back this claim up or is it just gut?
You are correct that Food Inflation is at the same level as the broad Inflation right now.
However last year when inflation peaked, Food inflation was 10.4% Y-on-Y (source, see 3rd chart) whilst broad inflation was 6.5% (source).
Meanwhile wage growth was at around the 6% mark (source) so below even broad inflation.
Looking at the graphs in all 3 sources, the higher than inflation average wage increase at the moment (even if it was evenly distributed across all income ranges, which in the present day US it is almost never the case) isn’t enough to compensate the already baked-in higher food prices due to the food inflation last year and the first quartile of this year.
Given that when people get overextended they will first draw down on any savings they have and cut down on non-essentials, and the problems that Target now pointed out didn’t just start today, it makes some sense that what they’re seeing is the reflection of an accumulation the effects from above wage growth inflation from April 2021 to early this year which was worse for Food during most of that period, significantly so at its peak.
Yes but we are just seeing people cut back now, when wage growth is now outpacing inflation. The top level comment made the claim that wages are stagnant. I corrected that by pointing out the facts and that it’s more complicated…and then you went on yo explain how it’s significantly more complicated.
And why put in all of this effort to cite your other sources, and then just claim that the poor are being screwed by wage growth, when low wage workers saw the largest wage increases coming out the pandemic? I can’t find the stats for right now which groups are seeing most robust growth.
Why do you keep saying the same thing even though the other guy keeps proving you incorrect?
He proved me correct by showing that wage growth is now beating out inflation, and that it’s more complicated than the top level comment alluded to with their false claims that wages are stagnant. I’m not sure what you think about my point is wrong.