As gas prices soar to levels that consumers never thought possible, consumer packaged goods (CPG) manufacturers and retailers are seeking to understand how the added strain on consumers’ budgets is impacting purchase behavior and needs.
This report provides an assessment of CPG spending patterns during three time periods throughout the past year in which average gas prices reached significant new levels (less than $2.00; $2.00 - $2.25; >$2.25 per gallon.) It is intended to provide manufacturers and retailers with industry benchmarks by which to evaluate their category, brand and store performance, and insights into likely future consumer behavior.
As highlighted in this issue, the CPG industry does not appear to have been negatively impacted, overall, by rising gas prices. In fact, as prices moved into the $2.00+ per gallon range, growth rates across CPG departments markedly improved.
As consumers have reduced spending in other discretionary areas, such as eating out at restaurants and entertainment, CPG retailers and manufacturers have apparently benefited. A slowing in CPG growth rates over the past few months as prices have exceeded $2.25 per gallon (reaching an all-time high of over $3.00 per gallon), however, will need to be carefully watched to determine if sustained gas pricing at this or higher levels will result in a new round of belt-tightening that will lead to CPG spending reductions. Or, once prices plateau, as they are expected to do by the end of the year, consumers may become accustomed to the new levels and maintain current practices or even go back to prior habits such as eating at restaurants more often. IRI will continue to track gas price impact throughout this period of high volatility.