A Major Grocer Deals With Deflation and Inflation

The current deflationary environment in food retail—particularly in the midst of an otherwise healthy economy—is a nearly unprecedented event in recent industry history.
At the same time, the publication said:

Social mood is still elevated, so deflation’s full scourge will hold off awhile longer.

And, today, the stock market, a nearly instantaneous reflector of social mood, remains elevated.

With that in mind, inflation is gaining ground with deflation in the grocery store business. But deflation is still holding its own in at least one food segment.

Read this excerpt from a March 2 article:

Kroger's Chief Financial Officer Michael Schlotman was a guest on CNBC's "Squawk Box" segment to discuss the company's results. He noted that the impact to the business from deflation remained in the fourth quarter but the mix was slightly different. Specifically, deflation in the grocery segment was a bit less in the quarter but produce deflation ticked higher by 500 to 600 basis points.
The executive was asked if food deflation is a product of heightened competition in the landscape as Wal-Mart Stores Inc continues to focus on groceries and fresh produce.
"Certainly pricing continues to be competitive," he acknowledged...
Schlotman further noted that the two most difficult scenarios for a grocer to manage are when product costs go from inflation to deflation and then the opposite when costs start to inflate back up. He added that it now feels like the company is entering the period where there will be some inflation coming back and this could happen by the end of the year.

You can read the entire article by following the link below: