Scripps News: Retail prices drop as cost of groceries stays high

May 9, 2024

Consumers are paying closer attention to their budgets these days, and many retailers are responding by lowering prices on non-necessary discretionary goods like clothes, furniture and decor.

"We are spending more on groceries," said Kishore Kulkarni, professor of economics at Metropolitan State University of Denver. "And because we are spending a whole lot more there, consumers are spending less in the shopping mall."

"People are switching up where they shop in order to stretch their budgets a little bit farther," said Claire Tassin, retail and e-commerce analyst at Morning Consult.

Last month, craft store Michaels announced it would lower prices on more than 5,000 items. The Swedish furniture store IKEA told CNN earlier this year it was reintroducing price reductions on several of its products. And the CEO of H&M announced during a recent earnings call that the clothing chain expects to have lower prices compared to the beginning of the year.

"They're really just having to offer more competitive prices and more discounts to win the sales," said Tassin.

Experts have seen some rises in discretionary spending.

According to a Thursday report from the National Retail Federation, retail spending was higher than last year for online stores, health and personal care, building and gardening supplies, clothing and accessories and general merchandise.

But Kulkarni says this won't last long.

"The effect is going to be temporary," he said. "In a few months or so, we will go back to our old ways."