Paying $70 to fill up your gas tank may have once felt like an unnecessary extravagance, but now that figure is approaching normalcy. Gas prices in the U.S. average $4.07 a gallon now. And since gas tanks average 15 gallons or so, that means it costs more than $60 to fill up your tank.
GasBuddy is predicting a national average price of $4.25 by Memorial Day. Of course, in some parts of the country, like California, prices are already over $5 a gallon.
Gasoline isn’t the only thing getting more expensive. IRI has predicted that inflation in the grocery space will run 8% for the first half of 2022. To make it worse, consumers believe that inflation is higher than it actually is. The war in Ukraine is adding uncertainty to the mix.
Nearly nine in 10 Americans say they have noticed prices rising, according to a survey conducted in mid-February from Morning Consult.
“Inflation has hit everything, but not [equally], even within categories,” said Joan Driggs, vice president of content and thought leadership for IRI. Driggs added that consumer elasticity is also a factor. “People are far more willing to pay higher prices for things like frozen entrees than they are for frozen pizza,” she said.
Driggs said that people are less sensitive to price increases for meals and entrees, but “where they are more sensitive to price increases are pizza, poultry, potatoes and onions, and maybe to a lesser extent, frozen bread dough.”
Driggs said that “trading down” is a fluid definition. “During the onset of the pandemic, people had no problem buying a lot of premium items. They were making their meals at home that much more interesting and kind of splurging a little bit,” she said. “They were getting great cuts of meat, they were maybe buying nice bottles of wine. But now people are saying, maybe we can't afford that. Or maybe I'll maybe I'll buy a cheaper version of produce, maybe I'll buy some canned goods, something like that, so that I can afford something nicer.”
IRI did a report last fall that showed national brands were still outpacing private-label products in terms of sales and growth. Still, inflation creates a perfect situation for private-label products to advance, she noted. That said, there are categories where private label hasn’t done well, like beverages. Driggs said that juices and carbonated drink prices are 14% higher than they were a year ago, but private label has not traditionally done well in that area because national brands are so powerful. “But this might be an opportunity where consumers start looking around for less expensive beverages to try.”