Inflation-pinched US shoppers are turning to discount stores

Spending at discount stores was up 65 per cent last week compared with 2019.
Spending at discount stores was up 65 per cent last week compared with 2019.PHOTO: BLOOMBERG

WASHINGTON (BLOOMBERG, NYTIMES) - US consumers are increasingly shopping at discount stores, a sign that families are feeling the pinch from highest inflation since the 1990s as the holiday season approaches.

Spending at discount stores was up 65 per cent last week compared with 2019, and 21 per cent from the prior week, according to Facteus, a firm that tracks credit and debit card transactions.

The discount stores category, which includes Dollar Tree and Five Below, had the largest increase by far among all types of retailers, Facteus data shows.

The sharp uptick suggests that consumers - especially those from lower-income households - sought lower prices wherever they could find them last week.

The last time discount stores saw a large increase in spending was in March, when all retailers benefited from a US$1.9 trillion (S$2.6 trillion) relief programme that sent new stimulus cheques to millions of households.

Now that relief programmes have expired, Americans are hunting for deals.

While wages have also risen during this year, the increase in prices for everything from energy and rent to food and vehicles has eaten into those gains. It is also squeezing profit margins for small businesses.

Energy prices are up 30 per cent from a year ago, while fuel prices soared 12.3 per cent for October, part of a 59.1 per cent increase over the past year.

Used vehicle prices rose 2.5 per cent on the month and 26.4 per cent for the year, according to CNBC.

Food prices are up 5.3 per cent and within the category, meat, poultry, fish and eggs collectively rose 1.7 per cent for the month and 11.9 per cent year on year.

As a result, US consumers are paying more for clothes, car parts, shelter, energy, food and lawnmowers.

Used car prices may not peak until April 2022, said Mr Jonathan Smoke, chief economist at Cox Automotive, which produces a closely watched index that tracks wholesale vehicle costs. After that, they are unlikely to actually fall; they will just increase less quickly than their current breakneck pace.

At #1 Cochran Subaru Butler County, a car dealership in Western Pennsylvania, general sales manager Jim Adams is offering a US$500 bonus to lease customers who return vehicles early, and buying cars that people bring in for repairs. He is asked a few times a day when things might normalise.

"Until the manufacturers can get back up to speed, used car prices will continue to grow," Mr Adams said in an e-mail.

As industries wait for balance to return, several Republicans in the United States House of Representatives have complained about rising food prices using the hashtag #ThanksgivingTax on Twitter and Facebook, tying US President Joe Biden to the latest economic data.

It is not clear who coined the phrase, but it has been used by representatives Elise Stefanik from New York and Lisa McClain from Michigan and even the official House Republicans' account, which has more than a million followers.

Moderate Democrats like Senator Joe Manchin are also sounding the alarm on inflation - even calling it a "tax".

"From the grocery store to the gas pump, Americans know the inflation tax is real and DC can no longer ignore the economic pain Americans feel every day," he tweeted.