Corporations say that consumers who were once unfazed by price hikes are now revolting.
bring inflation down"Several national retailers have announced plans to lower prices on certain items, and there is increasing evidence that higher-income shoppers are trading down to discount stores," Fed governor Lisa Cook said "My forecast," Cook said, is that inflation "will continue to move lower on a bumpy path, as consumers' resistance to price increases is reflected in the inflation data.
" "I have gleaned from recent earnings reports by publicly traded companies that lower-income consumers are pulling back from their purchasing and that firms are responding by moderating price increases or, in some cases, actually cutting prices," Fed governor Adriana KuglerFor value meals, it's a race to the bottom: McDonald's has a $5 value meal. Wendy's announced a $3 breakfast meal. Sandwich chain Subway launched a $3 "sandwich dipper."appeared on "Today" to promote the chain's offering: "I've zigzagged the country. I've been in our restaurants. I've sat in focus groups. Our customers are telling us that they are really stretched," said Joe Erlinger, president of McDonald's USA. "They felt the stress of the inflation of the last few years, and so this is a great opportunity for McDonald's to bring value," Erlinger said."Competition for the price-sensitive leisure traveler is gaining steam," analysts at Bank of America wrote in a note this week, pointing out that some airlines recently eliminated change fees and JetBlue added more benefits to its basic economy offering.The consumer pushback on high prices might be an early warning sign that they're facing financial stress, which could spread into broad economic weakness. Demand is slowing alongside early signs that consumers are falling behind on credit card payments and the labor market is losing steam.Share on linkedin
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