GLOBAL INFLATION REPORT
The Customer Perspective
So what does this mean for consumers?
If wages grow slower than inflation, consumers have less spending power and generally are forced to reduce consumption.
Our research shows that consumers are worried. More than two thirds of shoppers surveyed in the recent dunnhumby Consumer Pulse Survey say that food prices have increased ‘a lot’ compared with last year. Three quarters feel their country’s economy is weak and more than half see their own personal finances as challenged.
According to analysts, the historical tipping point around which shopper buying habits start to change is likely to be around 5% inflation1. Many of the world’s largest economies have already passed this point and inflation continues to rise and people are seeking value as a result. In September 2022, 60% of shoppers demonstrated value seeking behaviours, compared with 24% seeking quality.
Perceived inflation, according to the dunnhumby Consumer Pulse survey, September 2022
And this shift has been exacerbated by the impact of ‘perceived inflation’. The reality of increasing food prices, coupled with intense publicity around these increases, has led to a new reality where the perception of what the increase is far exceeds the reality.
Taking a global average, perceived inflation is around twice as high as actual inflation. Retailers must adjust their view. This exaggerated figure is the reality for shoppers – and grocers must recognise that.
Consumer Pulse research also shows that shoppers globally are displaying more value seeking behaviours, with 9 out of 10 customers taking steps to get better value where possible. These vary by country, and there are a mixture of value seeking strategies that are increasing (e.g. searching online for the best sales), and some that are decreasing (e.g. buying larger pack sizes).
Dr. Feroud Seeparsand
Senior Consumer Psychologist
"We see from the Consumer Pulse reports that perceived food inflation is always greater than actual food inflation. However, the degree of this difference changes from market to market. In other words, inflation is not felt in the same way in every market. If perception is reality, than we need to better understand perception, reality and the difference between the two. Furthermore, the relationship with perception and reality is changing over time…"