Whole Foods Asks Vendors to Lower Prices

Whole Foods has asked suppliers of packaged food to lower their prices in line with moderating inflation, The Wall Street Journal reports.

In the past year, food suppliers have raised wholesale food prices due to transportation, labor and production costs, and supermarkets have passed these higher prices onto their customers.

Shoppers have responded to sharply rising food costs by cutting back on purchases, selecting cheaper brands and looking for deals, and experts say U.S. consumers are now at an inflection point where many are no longer going to tolerate higher prices and are likely to cut back further on purchases.

Like other grocers, Whole Foods, which Amazon (AMZN) owns, appears to be aware of the limits of price elasticity.

“We know our customers are weighing the impacts of inflationary pressure on their buying choices,” says Alyssa Vescio, senior vice president of merchandising of center store at Whole Foods.

Whole Foods says it has not raised prices as much as other supermarkets and has even lowered costs on key items like cereal, bread and sparkling water.

Whole Foods is committed for its prices to reflect ebbing prices, a Whole Foods spokeswoman says.

In periods of easing inflation, commodities such as meat, produce and dairy are the first for prices to decrease, according to supermarket operators. Packaged foods tend to lag. Stores do have the option of absorbing costs and offering their customers better prices, they add.

In June, Walmart asked its food suppliers to lower their costs.

While some Walmart suppliers responded that they could not comply with the request, "others are working with us to find ways to reduce costs even in times when costs are going up," John Furner, CEO of Walmart U.S., said at the company's annual meeting.

"A number of suppliers" are working with Walmart to ensure prices do not go up, and in some cases, also finding ways to lower it, Furner added.