Amazon’s Whole Foods To Whole Paychecks Ride – Heard Of Inflation Folks?

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The Wall Street Journal is telling us that prices are on the rise again at Whole Foods. After Amazon’s takeover there was some hope that perhaps that reputation of “Whole Paycheck” might dissipate a little bit. And sure enough, there were price cuts immediately after the acquisition. But now prices are rising again, no doubt this is just a reversion to mean:

Amazon Slashed Prices at Whole Foods. Now They’re Climbing Back Up.
Online retail giant feels pressure from suppliers facing higher costs

We’re told elsewhere that this is indeed a reversal of policy:

Alas, it didn’t last long. The Wall Street Journal reports that Whole Foods’s price tags are already going back up. This month, prices went up on “on dozens of items from Dr. Bronner’s soaps to Häagen-Dazs ice cream,” reports the WSJ, citing an internal email announcing the change. “A separate company email in December listed 550 additional price increases on products including crackers, olives, and cookies.” All the good stuff is expensive again!

Except, well, not so much really.

A company email sent in December and viewed by The Wall Street Journal listed 550 items that would see increases. The company said that it has been forced into the move by suppliers charging more due to inflation. The average increase for items on the list was 66 cents. Prices also rose this month on an additional 50 items, as 700 contracts to sell certain goods at low prices expired. The new, higher levels on those items will bring Whole Foods hundreds of thousands of dollars per week in additional revenue.

Well, yes, just as they’ll have to pay out hundreds of thousands more a week to suppliers.

What’s really happened here is this:

The average bill reportedly went up more than 3%, compared to last fall.

The prices largely went down in 2017/2018 as a result of the price cuts following the acquisition. Inflation in the US is running at 2%, perhaps 2,5% a year – depends upon which month you want to use and which flavour of inflation, CPI, RPI, PCE and so on. We’ve 18 months to two years of inflation and a 3% rise and – yes, we’re just talking about adjusting for the general inflation in the economy, aren’t we?

So, back to sleep everyone. Whole Foods isn’t deliberately aiming to be Whole Paycheck again, it’s just that the general price level across the economy has changed and they’re adjusting to that.

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