The news: US consumers face a cost-of-living crunch, with over half (51%) struggling to afford groceries, per a Harris Poll survey conducted for The Guardian in June. Roughly the same share (52%) are also having trouble paying for gas, the cost of which is up 22% YoY, per AAA.

Those results dovetail with a separate survey by Global Strategy Group for The Kitchen Table Project, which found that rising prices for staples like poultry and meat—the cost of beef was up 12.9% YoY in May—are a leading cause of grocery stress.

Zooming in: Those pressures are driving clear shifts in behavior.

Some consumers are trading down at the pump. Sales of premium gasoline fell nearly 5% by volume June 22 to June 25 compared with the average prior to the start of the war in Iran, while mid-grade declined around 2% and regular rose about 10%, per Upside data cited in Bloomberg.

The same pattern is showing up in grocery. Sixty-one percent of consumers say they have changed their shopping habits, including trading down to private labels and switching to lower-priced retailers. That adds to existing pressure on grocers, who are already contending with SNAP benefit cuts affecting more than 3.5 million people and the impact of GLP-1 medications reducing food purchases.

In response, retailers are leaning into price.

• Kroger is preparing its largest price cuts in years.
• Costco sacrificed some margins to lower prices on staples like eggs and beef.
• Walmart cut prices on thousands of items across Walmart and Sam’s Club, drawing national attention.
• Whole Foods has reduced prices on more than 900 private-label products.

Implications for retailers and marketers: While price cuts may help retailers retain customers, recent results from CPG companies suggest the payoff may be limited.

• After PepsiCo lowered prices on snacks like Doritos and Cheetos by as much as 15%, its North American snack business volumes were flat and beverage volumes fell 4%, which the company tied in part to higher fuel costs.
• Nestlé has also seen signs of strain, with shoppers shifting toward value sizes or smaller packs, while General Mills reports increased reliance on promotions.

The reality is that there’s no silver bullet that can solve grocers’ current challenges. Lower prices may limit customer erosion, but they’re unlikely to drive incremental demand. In a constrained environment, consumers are just as likely to cut back—especially on discretionary or impulse purchases—as they are to trade down.