Inflation Outrage: Even As Prices Stabilize, Walmart, Chipotle And Others Feel The Heat From Skeptical Customers

Inflation may be cooling, but consumers’ outrage over higher prices is running hot.

TikTok users blasted Walmart for rolling out digital shelf labels that allow it to quickly raise and lower prices. Wendy’s backpedaled after its CEO suggested the burger chain may start using dynamic pricing, the practice of raising and lowering prices based on demand. And at some Chipotle locations, customers filmed workers to try to make sure they didn’t skimp on their burrito bowls.

The three joined a growing list of consumer brands contending with customers’ deep frustration over high prices — and wariness that prices will only rise more. Many retailers, restaurants and other consumer companies have seen sales fall as shoppers pull back their spending. Businesses are now trying to convince customers that they offer the best deals, fueling a rise in discounts, promotions and value meals.

Consumers are fed up with deceptive pricing, said Jean-Pierre Dubé, a professor of marketing at the University of Chicago Booth School of Business. They’ve seen smaller items on shelves, paid tacked-on fees and felt pressure to tip workers for things they didn’t tip for in the past.

“We’re reaching a boiling point on this,” he said.

The companies stocking grocery aisles contend consumer perception is skewed. Grocery prices have risen just 1% in the past year, according to data from the U.S. Bureau of Labor Statistics. But the food at home prices have climbed more than 24% since May 2019, stretching consumers’ wallets and stoking anger with companies.

Consumers’ buying power has also increased as inflation cools and the job market remains strong, boosting real hourly earnings for the average private sector worker, according to the BLS data.

Other key costs are raising Americans’ expenses, such as electricity and rent, which have climbed over the last 12 months.

“People experience the price of consumer products constantly, and that does tend to be a focus of what they can remember buying last,” said David Chavern, president of the Consumer Brands Association, a trade group representing Coca-Cola, Procter & Gamble and dozens of other consumer packaged goods companies. “But the reality is that what’s happening in the grocery store, in the drug store has not been a source of material inflation over the last 12 to 18 months.”

In a Pew Research Center survey from May, 62% of U.S. adults said inflation was “a very big problem in the country today,” a higher percentage than any other issues they were asked about including illegal immigration, gun violence, violent crime and the federal budget deficit.

That percentage has held roughly steady, even as inflation cools. In the year-ago survey by Pew, 65% of Americans said inflation was a very big problem.

Inflation has also become a major talking point on the presidential campaign trail. Former President Donald Trump has blamed President Joe Biden, while has Biden accused companies of greed.

Grocery inflation may be back to pre-pandemic levels, but that hasn’t eased the frustration of Americans who are paying way more than they did years ago.

Consumers, businesses and the Federal Reserve will get the latest read on inflation on Thursday when the federal government reports the consumer price index for June.

Dianna Campbell, 69, a TV producer and consultant in Manhattan, said she’s noticed prices rising and staying high, whether it’s for laundry detergent or a restaurant meal.

“You’re paying more for it, but you’re giving me less, and the quality is worse,” she said.

Campbell isn’t the only consumer angry about shrinkflation, the practice of cutting an item’s size, but not its price.

Over the past year, the term has become a household phrase through references in pop culture and politics. In March, both the Cookie Monster and Biden called out shrinkflation by name, the former for reducing the size of his beloved treats and the latter for decimating Snickers bars. (Snickers’ parent company, Mars, denied skimping on the chocolate bars).

Customers have seen plenty of other examples on trips to the grocery store.

In a report on shrinkflation, Sen. Bob Casey, D-Pa., called out Gatorade for swapping out a 32-ounce bottle for a 28-ounce version and keeping the same price.

Gatorade denies that it changed its packaging for profits. PepsiCo spokesperson Andrea Foote told CNBC that the 28-ounce bottle of Gatorade has been around for more than a decade, and widening its distribution was part of the company’s long-term strategy, not a response to the current economic climate.

Retailers have also been accused of shrinking the size of private-label items. Walmart, for instance, cut the number of sheets in its Great Value paper towel rolls from 168 to 120 but did not reduce the price. Company spokeswoman Tricia Moriarty said it’s not shrinkflation because Walmart reformulated the product to make each sheet more absorbent.

Awareness of shrinking portions contributed to recent backlash against Chipotle. After some customers thought their burrito bowls were smaller, they began filming the workers making their orders and posting the videos on TikTok.

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