Snacks are getting cheaper

Snack food prices are falling at their fastest rate in years, a sign that at least some companies recognized they’ve reached the limit of what Americans are willing to shell out for a bag of potato chips.

The reason for the downturn? It’s pretty straightforward. Prices got way too high, and customers stopped buying. That forced companies that sell such snacks, like Mondelez or PepsiCo, to cut prices, modify packaging, or boost discounting and promotions to hit the price points consumers want to see.

“High prices remain certainly a big concern,” Mondelez CEO Dirk Van de Put said, responding to a question from analysts after reporting earnings results last month. “Consumers clearly feel that their purchasing power is deteriorating, particularly, I would say, in the lower-income consumers. They’re the ones that feel most of the pressure.”

Those price adjustments have weighed on sales as well as market sentiment on snack-food companies.

But PepsiCo’s pain is consumers’ gain, with shoppers enjoying options a bit cheaper lately on snack food. Still, snack prices — which are up more than 20% from the end of 2019 — would have to keep falling for a while to return to their pre-Covid reality.