Supermarkets facing 'perfect storm' amid inflation, demand surge: Grocery chain CEO
Inflation surges to highest rate in 40 years in December
Stew Leonard's CEO Stew Leonard Jr. argued on Wednesday that supermarkets are facing the "perfect storm" amid high inflation and a demand surge.
Leonard attributed the demand surge to people not wanting to go out to eat in restaurants as much due to fears related to COVID-19.
"We have a lot more home chefs. People are cooking restaurant-quality steaks at home, so you’re seeing a demand surge right now which puts an effect on the market," he told "Mornings with Maria" on Wednesday.
"I think there’s another half of it, which has to do with real-life stuff; fuel prices are up, labor costs," he continued." We’ve had to raise our labor rates $2 an hour at Stew Leonard's. That’s not going to go away. So you’re going to feel it a little bit."
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Leonard provided the insight shortly before it was revealed inflation rose at the fastest pace in nearly four decades in December, as rapid price gains fueled consumer fears about the economy and sent President Biden's approval rating tumbling.
The consumer price index rose 7% in December from a year ago, according to a new Labor Department report released Wednesday, marking the fastest increase since June 1982, when inflation hit 7.1%. The CPI – which measures a bevy of goods ranging from gasoline and health care to groceries and rents – jumped 0.5% in the one-month period from November.
Economists expected the index to show that prices surged 7% in December from the year-ago period and 0.4% from the previous month.
Price increases were widespread. Although energy prices fell 1.1% in December from the previous month, they're still up 29.3% from last year. Gasoline, on average, costs 49.6% than it did last year. Food prices have also climbed 6.3% higher over the year.
Leonard said he is looking at inflation through a long-term lens and is "eating some of the price increases right now."
He noted that the farmers he has been working with for years have agreed to "go 50/50 on this" and wait before significantly increasing prices.
"So we’re holding it right now as low as we can do it and I hope things will start trickling down a little bit as we get through this supply chain issue that we’re having right now," Leonard told host Maria Bartiromo.
In addition to price increases, grocery shoppers across the country are also encountering barren shelves when looking for their typical supplies due to supply chain snags, increasing COVID-19 infections and related hurdles as well as severe winter weather.
Leonard said shoppers will not face empty shelves at his grocery stores, but warned that shoppers might not be able to find the selection that they wanted.
He stressed that "we’re back to high-level COVID issues again here in January of 2022."
"I wouldn’t have believed it," he added.
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Stress on the supply chain due to labor shortages has ultimately come to fruition, wiping out products from store shelves across the nation.
Leonard called the labor shortage the "biggest" issue at the moment.
"I’ve talked to our ranchers in Kansas City yesterday, I talked to our fishermen, our farmers, and everybody’s talking about that they just can’t get enough labor," he told Bartiromo.
"If they were working six-day weeks, they had to go to five-day weeks."
"It’s the same thing at Stew Leonard's," he continued. "We’re down 8% of our people right now. It went from 8% to 6% this week."
The family-owned and operated grocery chain employed more than 3,000 people as of 2019 between its stores in Connecticut, New York and New Jersey.
Reporters and other shoppers took out their frustration regarding empty shelves on Twitter by sharing photos of their local grocery stores and tagging #BareShelvesBiden, which began trending.
The Biden administration has caught flak in recent months for the supply chain crisis and rising inflation that has interrupted Americans' everyday lives. Yet, White House Chief of Staff Ron Klain and liberal media pundits have suggested the concurrent economic issues have been overblown.
Leonard noted on Wednesday that he believes "the worst is behind us right now."
He pointed out that "everybody came out and shopped" during the holiday season and "were ready to party" as well as get together with their families.
"And I think that opened everybody up to COVID exposure or omicron exposure," he continued. "So we’re seeing the effects of that right now, but we’re starting to see it wind down a little bit."
Scientists are seeing signals that the omicron wave is about to peak in the U.S., at which point cases may start dropping off dramatically.
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The variant has proved so contagious that it may already be running out of people to infect, less than two months after it was first detected in South Africa.
The University of Washington's own highly influential model projects that the number of daily reported cases in the U.S. will crest at 1.2 million by Jan. 19 and will then drastically fall.
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FOX Business’ Megan Henney, Angelica Stabile and The Associated Press contributed to this report.