Supermarkets stocking up on food in anticipation of supply chain disruptions, price inflation

Supermarkets all over the country are stocking up on many of their food items in anticipation of a surge in food prices. Many supermarket executives are warning that the upcoming inflation might lead to some of the highest price increases in recent memory.

Many supermarkets are purchasing additional supplies to keep up with stronger demand. Grocery sales in the United States for the week that ended on June 19 rose by 15 percent compared to two years ago and 0.5 percent from one year ago.

Other supermarkets are keeping additional food supplies in storage, driving shortages of some staples. Many executives in the grocery industry have criticized this practice, saying that it is increasing the challenges felt by the American food supply chain.

The country’s supply chain is already under pressure from increased transportation and labor costs and ingredient constraints. Retailers have countered that their actions are necessary to keep costs down for consumers and protect their profit margins.

“We’re buying a lot of everything,” said David Smith, chief executive officer of Associated Wholesale Grocers, one of the nation’s largest wholesalers. “Our inventories are up significantly over the same period last year.”

Associated Wholesale Grocers purchased up to 15 to 20 percent more inventory for its more than 3,000 grocery stores. Most of the goods they purchased are packaged foods with longer shelf lives.

The higher stock of food items helps Associated Wholesale Grocers fight off shortages of items and the rise in costs associated with it. Some supermarkets have been forced to raise food prices. Many others are keeping their prices relatively the same to better compete against groceries that offer discounted or low prices.

“When you have a unique inflationary period like now, it’s a feeding frenzy,” said Tony Sarsam, chief executive officer of the Michigan-based retail and food distribution company SpartanNash. His company is stockpiling up to 20 to 25 percent more of certain items like frozen meat and boxed foods. Sarsam explained the company started doing this after more than 100 of his suppliers said they are raising their prices.