Rising Grocery Prices Are Frustrating Americans

Alex Ossola (0:03)

Better than Expected Bank Earnings show that the US economy is still going strong. Plus, how frustrated shoppers are dealing with grocery prices that just keep rising. And as countries back off their EV targets, what does that mean for automakers?

Stephen Wilmot (0:18)

Many people still see EVs as the future in the industry, but it's a future which will arrive a bit later than previously anticipated.

Alex Ossola (0:29)

It's Wednesday, October 15th. I'm Alex Ossola for the Wall Street Journal. This is the PM edition of What's News, the top headlines and business stories that move the world today. On yesterday's show, we told you that a handful of big US banks had reported better than expected earnings for the third quarter. Today, Bank of America said its profit rose 23% to $8.5 billion, thanks to healthy consumer activity and a busy summer in its investment banking division. As a group, the six largest banks in the US earned nearly $41 billion in the last three months, up 19% from a year ago. Banks are viewed as barometers for the broader economy because they see details of the financial health of millions of American households and companies. In earnings calls this week, executives pointed out signs of strength.

SPEAKER_3 (1:24)

We do see in our data that the consumer is spending more.

Alex Ossola (1:27)

That was Bank of America Finance Chief Alastair Borthwick talking about consumers putting more on their credit and debit cards.

SPEAKER_3 (1:33)

And that feels consistent with a growth economy.

Alex Ossola (1:36)

But executives also pointed out causes for concern about the US economy at a moment when it's been flashing conflicting signals. In recent months, national GDP and other indicators showed the economy was holding steady. Concerns about a sluggish job market have raised fears about the financial health of lower income households. Most banks and financial services companies say the economy is holding up, even if they remain wary about potential cracks. New lawsuits against Bank of America and Bank of New York Mellon over their ties to Jeffrey Epstein accused the banks of maintaining relationships with a convicted sex offender and failing to report suspicious activities until after his 2019 death. The two class action lawsuits were filed in federal court today on behalf of a Jane Doe and other women who have accused Epstein of abuse. They allege that Epstein's trafficking operation would not have existed without the banks that provided special treatment to Epstein and his co-conspirators. The suits seek unspecified financial damages. Spokesman for Bank of America and Bank of New York Mellon had no immediate comment.

The Labor Department has delayed the release of September inflation data until next week because of the government shutdown. That information gives an important update on prices. But for businesses and shoppers, there's plenty of evidence out there right now for rising prices, particularly at the grocery store. This is the chief executive of Albertson's grocery company, Susan Morris, on an earnings call this week.

SPEAKER_3 (3:09)

So what we've seen from the consumer is a continued focus on value, a shift to trading down maybe at smaller package sizes, a focus on own brand.

Alex Ossola (3:20)

Well overall, inflation this year has been far below the pandemic era price increases. The August inflation report showed grocery price inflation picking up. The price of coffee rose nearly 21% over the 12 months ending in August, while ground beef rose 13% during the same period. Dairy, fruit and vegetables, and cereals all got more expensive. So, how are people feeling about the rising cost of groceries? Outside my local grocery store in Brooklyn, it wasn't hard to get people to talk about it. This is Robert Klein.

Robert Klein (3:51)

The prices are ridiculous.

Alex Ossola (3:53)

Right.

Robert Klein (3:53)

I come here because it's near my house, but all prices, they're ridiculous. I have grandkids, they, you can't buy a toy, you can't buy, it's through the ceiling. You know, things have to go up, people have to earn a living, but within reason.

Alex Ossola (4:10)

Rising commodity prices are driving some of the increases, including American beef. The Trump administration's tariffs have made some imports like Spanish olive oil more expensive, but food companies have absorbed some of those costs. Albertsons, the supermarket company, is trying to cut down its own costs to counter inflation, its CEO said. Shoppers are trying to save too.

SPEAKER_3 (4:30)

We see an increased usage in coupons. We see them sticking closer to their shopping lists, maybe not buying that extra item, that extra bottle of whatever. They're kind of shortening their lists and sticking to it.

Alex Ossola (4:48)

Blockbuster earnings by America's biggest banks tempered fears that the economy is headed for a slowdown, pushing US stocks mostly higher today. The NASDAQ rose about 0.7 percent, the S&P 500 was up 0.4 percent, and the Dow ended nearly flat. Meanwhile, gold prices hit yet another record high. Coming up, what do changing government subsidies mean for the future of electric vehicles? That's after the break.