Discount stores

Discount stores are raising prices at a faster rate than many other grocery stores amid inflation

Sheri Thompson is struggling to stretch her family’s $200 weekly food budget with nationwide grocery prices up 13.5% since last August.

“My grandson, he comes in and says, ‘Nana, we should be lunchtime now. And I said, ‘No. We actually skipped lunch. We’re having dinner,’ said Thompson.

She shops at Dollar General, where new data suggests overall prices are up nearly 24%, according to Numerator. At nearby ALDI, prices have risen by almost 17%.

Both discount stores are often used by families in low-income neighborhoods.

Leo Feler, chief economist at Numerator, which tracks hundreds of millions of shopping receipts, says food inflation disproportionately hits low-income people because higher-income communities have more options.

“You can go from a Whole Foods to a Walmart, from a Walmart to a Dollar General,” Feler said. “Once you’re a low-income consumer, you’re already at the cheapest place you can possibly buy food. And that just means those stores have more pricing power.”

Discount stores have raised prices for meat, poultry, fish, eggs and dairy at a faster rate than many other grocers.

Milk prices at a single Dollar General store in Texas soared 20% a year ago.

“Like many other retailers, we have been forced to pass on some product cost increases, although not of the magnitude suggested by Numerator,” Dollar General said in a statement to CBS News.

ALDI did not respond to a request for comment.

Yet discounters are cheaper than most other supermarkets which can only drive prices so high.

“You can’t raise prices if people are going to walk away from you”, Feler said. “Except at a Dollar General or ALDI, people don’t walk away. More and more people are coming to these stores, despite the higher prices.”

The researchers also found that when grocery money starts to run low, cash-strapped consumers turn to less healthy options, like dollar menus at fast food restaurants.