Inflation Speeds Up Again, Dealing Another Blow to Bev/Al Marketers

Inflation speeded up in May, rising 4.2% from a year earlier, the fastest pace since April 2023.

While many producers have tried to hold the line on prices, others have raised them, wiping out pay increases Americans received over the past year. Adjusted for inflation, hourly earning have fallen 0.7% over the past year and are exactly where they were when President Trump returned to office.

“The numbers were great,” Trump told reporters at a bill signing on Wednesday.

The pain is reaching consumers making more than $100,000 a year who are visiting Dollar General stores, the retailer told investors.

What does all this mean for the bev/al industry? More pain, we're afraid. The Federal Resereve meets to decide whether to raise interest rates. The core inflation rate the Fed watches most carefully rose only 2.9% which may allow the Fed to postpone an increase for now.

But it certain doesn't help sales at all, except at the highest levels. The University of Michigan's consumer survey found consumers in a foul mood. Dollar General told investors consumers making more than $100,00 a year are visiting Dollar General stores for essentials. So, if bev/al marketers are lucky, sales will be flat, not down.

The increase in energy prices was driven almost entirely by energy prices which were up 23.5% from a year earlier, and that. in turn is a result of the war with Iran which has reduced the global oil supply by more than 10 million barrels a day compared to a year ago, according to the U.S. Energy Information Administration.

Analysts, economists and other attribute the current slide in bev/al pricing to high prices, among other factors, and have several execs in their public earnings calls.