Kroger, the top U.S. grocery store operator, may be getting squeezed by rising dairy prices, with competition from other retailers keeping it from passing on some price increases from suppliers.
In dairy, “the rate of inflation was pretty fast,” Chairman and Chief Executive David Dillon said, while discussing first quarter earnings. “For competitive reasons, we don’t want to move the price up too quickly.”
Commodities like dairy are more subject to fluctuations in volume as well as cost, Dillon said. Inflation in this category is generally not sustained, but subject to swings and cycles.
“We choose sometimes to be a little slower,” Dillon said. “It doesn’t help us much to pass through the whole increase if it hurts our sales.”
Kroger has also seen the same sort of pressures when it comes to produce prices, he said.
–Written by Regan E. Doherty
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