Key Points

  • As shoppers await price cuts, retailers like Home Depot say their prices have stabilized and some national consumer brands have paused price increases or announced more modest ones.
  • Yet some industry watchers predict deflation for food at home later this year.
  • Falling prices could bring new challenges for retailers, such as pressure to drive more volume or look for ways to cover fixed costs, such as higher employee wages.
  • thatKamGuy@sh.itjust.works
    link
    fedilink
    arrow-up
    2
    arrow-down
    4
    ·
    8 months ago

    This is an over-simplification, but consider this:

    A farm has to sell their produce/livestock below their cost-price, because demand has dropped and the resulting over-supply has caused a race to the bottom as producers try to recoup as must value as possible.

    This leads to less funds available to produce the next round of crops (further negatively impacted by economies of scale), cover operating expenses and pay staff wages.

    People lose their jobs and livelihoods, causing a negative feedback loop resulting in less demand overall… repeating the cycle. The Great Depression of a century ago was an example of a similar scenario.

    • pelotron@midwest.social
      link
      fedilink
      English
      arrow-up
      4
      ·
      8 months ago

      How’s this for an over simplification: we should find the guy who got the big bag of money that started the whole thing open that bag.