Why do discounted products escape inflation?

Does inflation affect discounts as much as regular prices? The answer is no, and the explanation is quite simple: the brochure is first and foremost an advertising tool for grocery stores.

Although not all the offers presented are so advantageous to each other, the truth is that the main objective of the circular is to attract you to the store, even if this means offering some products at a loss. Many discounts are also negotiated and planned with producers and processors.

Let’s take Vachon, the favorite cake brand of many Quebecers, to illustrate the phenomenon. Just before 2020, the list price for these boxes was around $3.49. Now, that price is around $5.29, which represents an increase of almost 50% in just a few years. What about pre-2020 specials? At the time, you could regularly find the box on sale for $2.49. Today, you can occasionally find it for $3, a 20% markup that’s a little less hard to swallow.

You could say it’s a bit of a simple analysis, because maybe Vachon’s strategy has evolved to focus more on discounts. This still illustrates that the consumer who follows the specials sees a much less marked increase than if he had always been used to buying at regular price. This is the case for a wide variety of processed products.

If we only look at flyer data, it is also more difficult to observe inflation for certain products such as fruit and vegetables, because a lot of factors can influence the price, such as demand, supply, origin, abundance , the season and the climate in particular. Remember that these are foods that should generally be consumed quickly so they don’t go to waste.

When it comes to fruits and vegetables, and sometimes even meat, it’s not that unusual to see record discounts in circulars. For example, last week we had the best price ever seen for snapper (IGA) since Glouton, my company, started collecting the data over four years ago. Also this week, we also have the best ground pork price in almost a year (IGA).

Beyond the first page

While it’s true that the deals you might be most interested in are usually found on the first page of circulars, it’s not uncommon to find some “hidden” ones further down. On the other hand, they are less numerous and we must know how to identify them. These offers are sometimes not highlighted for various reasons, for example because stocks may be insufficient, because it is a product in less demand, or because the supplier does not have an agreement with the retailer.

So brochure-based planning is still probably the best way to weather price hikes.

Jean-François Gagné Bérubé is the founder of Glutton.ca.

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