# From burgers to bleach, stressed consumers buy cheap
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-07-26
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Global Consumers Facing Cracking Amid Rising Inflation and
Meta Description: Global consumers are torn between buying essentials like food and bleach due to record inflation while luxury shoppers splurge on high-end items like $3,000
URL: https://financedigest.com/from-burgers-to-bleach-stressed-consumers-buy-cheaphtml

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By Hilary Russ and Richa Naidu

NEW YORK/LONDON (Reuters) -Some global consumers are showing signs of cracking, as shoppers stressed by record inflation stick to buying basics like food, bleach and cheap burgers, while those with bigger bank accounts are snapping up $3,000 Louis Vuitton handbags.

Investors are closely watching corporate results for signs economies are headed toward recession. But so far consumers are [sending mixed signals](https://www.financedigest.com/stocks-dollar-little-changed-as-inflation-data-sends-mixed-signals.html "Stocks, dollar little changed as inflation data sends mixed signals"). There is weakness seen in those that have been [hit hardest](https://www.financedigest.com/digital-divide-hits-rural-black-americans-hardest.html "‘Digital divide’ hits rural Black Americans hardest") by record fuel and food prices. Meanwhile, [credit card](https://www.financedigest.com/uk-credit-card-borrowing-rises-by-most-since-2005-boe.html "UK credit card borrowing rises by most since 2005 – BoE") and other data shows some are still spending on travel and other high-end pursuits.

Walmart sounded a warning shot on Monday, issuing a rare [profit warning](https://www.financedigest.com/bootmaker-dr-martens-warns-on-profit-as-finance-chief-walks.html "Bootmaker Dr Martens warns on profit as finance chief walks"). Its U.S. customers, who tend to come from lower-income households, are [buying food](https://www.financedigest.com/european-food-delivery-shapes-up-with-getirs-gorillas-buy.html "European food delivery shapes up with Getir’s Gorillas buy") and other essentials, while skipping aisles filled with clothes and sporting goods.

“The results overnight indicate that U.S. [consumer is now much more focused on the staples element of shopping where we’ve got double-digit food inflation coming through in some of these retailers,”](https://www.financedigest.com/france-leans-on-retailers-to-help-consumers-cope-with-food-prices.html "France leans on retailers to help consumers cope with food prices") says Nicola Morgan-Brownsell, fund manager at Legal & General Investment Management.

U.S. [consumer confidence fell for a third straight month in July amid persistent](https://www.financedigest.com/uk-consumer-mood-hits-one-year-high-but-financial-gloom-persists.html "UK consumer mood hits one-year high, but financial gloom persists") worries about higher inflation and rising interest rates. \[nL1N2Z71AO\]

Sales at luxury group LVMH Moet Hennessy Louis Vuitton SE climbed 19%, slightly [lower than earlier this year](https://www.financedigest.com/spains-inflation-to-be-lower-this-year-than-in-2022-minister.html "Spain’s inflation to be lower this year than in 2022 -minister"). Handbag and high-end liquor [sales in Europe and the United States helped offset slowdowns](https://www.financedigest.com/logitech-quarterly-sales-fall-22-as-slowdown-fears-bite.html "Logitech quarterly sales fall 22% as slowdown fears bite") stemming from COVID-19 lockdowns in China.

YOU GOTTA EAT

[Consumer giants Coca Cola Co and McDonald’s Corp and Unilever Plc all said on Tuesday that their products](https://www.financedigest.com/50-of-consumers-wont-spend-more-than-20-minutes-applying-for-financial-products-online.html "50% of consumers won’t spend more than 20 minutes applying for financial products online") are still selling, even at higher prices.

Unilever, which has 400 brands including Hellmann’s mayonnaise, Knorr stock cubes and Domestos bleach, [raised its full-year sales guidance after beating first-half underlying sales forecasts as its hiked prices](https://www.financedigest.com/analysis-to-raise-prices-or-not-consumer-goods-makers-weigh-bets-on-buyer-strength.html "Analysis-To raise prices or not? Consumer goods makers weigh bets on buyer strength").

So far consumers are buying, but there is a question around how long that can last.

We see [price increases](https://www.financedigest.com/coca-cola-hbcs-annual-profit-beats-warns-of-price-increases.html "Coca-Cola HBC’s annual profit beats, warns of price increases") when we go out to do a weekly shop. The question is: how much more accepting can the consumer be on those [price increases?”](https://www.financedigest.com/taylor-wimpey-espana-remain-cautiously-optimistic-as-average-selling-price-increases-by-20-4.html "Taylor Wimpey España ‘remain cautiously optimistic’ as average selling price increases by 20.4%") said Ashish Sinha, portfolio manager at Unilever and Reckitt shareholder Gabelli.

McDonald’s which operates nearly 40,000 restaurants, said its global same-store [sales jumped](https://www.financedigest.com/indias-tata-motors-jumps-to-a-7-month-high-on-strong-q4-jlr-sales.html "India’s Tata Motors jumps to a 7-month high on strong Q4 JLR sales") almost 10%, much better than the expectation for an increase of 6.5%.

Even so, the Chicago-based company said it is [considering whether to add more discounted menu options](https://www.financedigest.com/3-options-to-consider-when-you-owe-the-irs-back-taxes.html "3 Options to Consider When You Owe The IRS Back Taxes") because soaring inflation – particularly in Europe – is leading some lower-income consumers to “trade-down” to cheaper items and to buy fewer big combination meals, Chief Financial Officer Kevin Ozan said during a call with investors.

Coke’s global sales volumes rose 8% in the second quarter, the company said, powered by growth in both developed and emerging markets, while average [selling prices](https://www.financedigest.com/3-tricks-to-get-a-better-price-when-selling-your-car.html "3 Tricks To Get a Better Price When Selling Your Car") increased about 12%.

Coke’s results are testament to its [brand value because consumers](https://www.financedigest.com/slow-refunds-hurt-consumers-and-brands-alike.html "Slow refunds hurt consumers and brands alike") are unwilling to trade down to other colas, despite increasing prices,” CFRA analyst Garrett Nelson said.

[SLOWDOWN AHEAD](https://www.financedigest.com/hopes-of-slowdown-in-rate-hikes-bolster-shares-ahead-of-u-s-gdp.html "Hopes of slowdown in rate hikes bolster shares ahead of U.S. GDP")?

Germany-based footwear [maker Adidas AG cut its earnings target for the year due to a slow recovery for its business in China](https://www.financedigest.com/lighting-maker-signify-cuts-2022-outlook-again-on-china-business-lighting.html "Lighting maker Signify cuts 2022 outlook again on China, business lighting").

General Motors Co on Tuesday reaffirmed its full-year [profit outlook on an expected](https://www.financedigest.com/portuguese-airline-tap-swings-to-profit-earlier-than-expected.html "Portuguese airline TAP swings to profit earlier than expected") surge in demand and said it was curbing spending and hiring ahead of a potential economic slowdown, but a 40% drop in its quarterly net income disappointed, sending shares lower.

The Detroit automaker’s net income fell 40% in the [second quarter from a year](https://www.financedigest.com/ericssons-board-rebuked-by-shareholders-at-agm-for-second-year-in-a-row.html "Ericsson’s board rebuked by shareholders at AGM for second year in a row") earlier due to supply-chain snarls, including a global semiconductor chip shortage that hit hardest in June. The company’s [shares fell 3.5% in midmorning trading](https://www.financedigest.com/russian-central-bank-gives-legal-entities-green-light-to-trade-foreign-shares.html "Russian central bank gives legal entities green light to trade foreign shares").

Nevertheless, GM sees a lot of [pent-up demand](https://www.financedigest.com/pent-up-demand-prompts-european-travel-recovery-as-covid-curbs-ease.html "Pent-up demand prompts European travel recovery as COVID curbs ease").

GM Chief Financial [Officer Paul Jacobson said Tuesday that despite the hit from the global](https://www.financedigest.com/black-panther-sequel-ignites-box-office-with-330-million-global-debut.html "‘Black Panther’ sequel ignites box office with 0 million global debut") chip shortage in June which continued in July, GM still sees strong pricing and demand for its vehicles. The automaker reaffirmed its [profit outlook for the year](https://www.financedigest.com/crop-merchant-louis-dreyfus-gets-profit-boost-in-volatile-year.html "Crop merchant Louis Dreyfus gets profit boost in volatile year"), as Jacobson said the company sees demand in the second half making up for any shortfalls in the second quarter.

A GM pickup truck starts around $31,500 for a base Chevrolet model, while a loaded GMC Sierra can top $100,000. Most [models come](https://www.financedigest.com/like-father-like-son-when-it-comes-to-money-men-more-likely-than-women-to-see-parents-as-a-good-role-model.html "Like father like son? When it comes to money, men more likely than women to see parents as a good role model") in the $50,000 to $70,000 range.

We feel good about making up all that (lost) volume in the back [half of the year,”](https://www.financedigest.com/an-apple-a-year-half-of-iphone-users-will-upgrade-to-the-iphone-7.html "AN APPLE A YEAR: HALF OF IPHONE USERS WILL UPGRADE TO THE IPHONE 7") he said.

[(Reporting by Medha Singh, Uday Sampath Kumar and Praveen Paramasivam in Bengaluru, Ben Klayman in Detroit; additional reporting by Jessica DiNapoli in New YorkWriting by Anna Driver](https://www.financedigest.com/tesla-reports-two-new-fatal-crashes-involving-driver-assistance-systems.html "Tesla reports two new fatal crashes involving driver assistance systems"), editing by Nick Zieminski)


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