Market signals.

Household staples are no longer immune to inflation.

American consumers are starting to cut costs on mainstays from toothpaste to baby formula as inflation hits a swath of the economy that had thus far proven resistant to substantial price increases.

Procter & Gamble Co., Clorox Co., Kraft Heinz Co. and other consumer-products giants have made a bet that consumers will pay up for household products even as inflation takes hold. Over the past year, the companies have seen profits and market share grow as they have raised prices on products from detergent and diapers to snacks and soda.

Now consumers, hit by soaring costs for everything from gasoline to child care, are drawing a line, analysts and retailers say. Shoppers are buying staples in smaller quantities, switching to cheaper, store-name brands and more rigorously hunting for deals. The shift is especially pronounced among lower-income consumers who splurged on household products amid the heights of the pandemic, they say.

Of course there’s increasingly fewer options in that regard. And generic brands are still the product of a small number of supermarket giants which are still coping with the same inflationary and supply chain shortages. 

So it’s more of an illusion than a solution.

Since supermarket chains are competing with Amazon and Walmart they may have a bit of an investment in maintaining lower prices, but investors expect growth and that means price increases will still happen even if they’re disguised in various ways such as shrinkflation or fake sales.

But what people are also doing is buying less.

Another telling sign: sales volumes have begun to fall in a number of categories, meaning people are buying mainstays in smaller quantities. 

Which is going to have its own impact on the marketplace as volume drops to compensate. Less manufacturing won’t lead to lower prices. But it’s a rational response by individual consumers even as it additively depresses the economy.

Just more of the Biden economy in action.