Even amid the hope that we are at “peak” inflation, it’s clear that consumers on both sides of the Atlantic are buckling under the weight of higher prices.
Some of the wounds at Kohl’s are self-inflicted. It made some questionable fashion choices, such as betting big on athleisure just as Americans started dressing up again. But a change in mid-market spending is plausible. In July, middle-income earners suffered the biggest contraction in their spending power, according to Morning Consult. Even among higher earners, fewer reported having money left over after paying monthly expenses, according to the consumer-intelligence company.
While high-earners spent more on restaurants in June than a year earlier, according Morning Consult, they are starting to pull in the purse strings at the margins. For example, fewer households with annual incomes of $100,000 or more reported ordering takeaway food several times a week. This may reflect the fact that they are spending more time out of the house, but it could also be that inflation, together with high borrowing costs and depleted savings, are taking a toll.
But the switch into supermarket-owned brands is so vast that it’s unlikely to be confined to one income class. US private-label grocery sales accelerated further in July, according to IRI. In Europe, food-price inflation is expected to have ramped up private-label sales in western European countries in July and August. It helps that supermarkets have developed more premium in-house brands.