Shoppers in America turn to discount stores as inflation bites

WASHINGTON • Consumers in the United States are increasingly shopping at discount stores, a sign that families are feeling the pinch from inflation that has hit the highest level since the 1990s, as the holiday season approaches.

Spending at discount stores was up 65 per cent two weeks ago 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 lower-income households - sought lower prices wherever they could find them.

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$2.57 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 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 last month, 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 industries wait for balance to return, several Republicans in the US House of Representatives have complained about rising food prices using the hashtag #ThanksgivingTax on Twitter and Facebook, tying 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 (Washington) can no longer ignore the economic pain Americans feel every day," he tweeted.

BLOOMBERG, NYTIMES