I’ve delayed as long as possible. There’s nothing left in the refrigerator but condiments, and the pantry is bare except for a few random canned goods.

That’s right – it’s time to go grocery shopping.

Just when you think they can’t get much higher, the latest monthly Consumer Price Index (CPI) report showed a 2.4% uptick in fruits, vegetables and other kitchen staples. Officially, supermarket prices have now climbed by approximately 30% over the past five years.

Honestly, it feels like more. Surveys repeatedly show that grocery trips are among the chief causes of financial angst… right up there with housing, insurance and healthcare.

An ordinary pound of ground beef priced at $4.50 in 2020 sells for $6.75 today. Some of the blame can be pinned on rising feed and transportation costs borne by ranchers. But the bigger issue is persistent droughts in western states, which have shrunk the U.S. cattle herd to the lowest levels since the 1950s.

You’re gonna pay a lot more for that prime-grade ribeye steak.

Meanwhile, your morning mug of caffeine is getting more expensive as well. In fact, average coffee prices have surged from $4.17 per pound in 2020 to $9.46 today – a jolting 125% increase. Wholesale arabica bean prices are up 30% over the past 12 months alone, due in part to crop shortages in Brazil and other flood-ravaged countries.

The rollback in tariffs has provided some relief, but not enough.

Soft drinks. Poultry. Wheat bread. Chocolate. Orange juice. All are at least 40% to 80% more expensive compared to March 2020.

Without naming retailers, I’ve seen half-gallon tubs of Blue Bell ice cream pushing $10. And $11 for a family-sized box of Honey Nut Cheerios cereal. These prices would be almost comical, if the strain on household budgets wasn’t so real.

Even more devious is shrinkflation, where prices hold firm but for a reduced portion or quantity. Maybe there’s fewer pretzels in that bag. Or that tube of toothpaste is downsized from 12.2 ounces to 10.5. The net effect is the same.

Nationally, the average family is now spending close to $700 monthly on groceries. Not surprisingly, one-third of shoppers are routinely using credit cards (or buy-now-pay-later arrangements) to cover their purchases. Even higher-income households are making cutbacks.

We’ve been seeing a textbook case of demand elasticity.

When prices topped $7 for a simple bag of chips, consumers traded down to cheaper generic versions. Predictably, big box retailers began giving more shelf space to their own alternatives. Like Great Value Crunch Corn Chips, Wal-Mart’s (NYSE: WMT) answer to Fritos — bargain-priced at just $1.97 per bag.

Target (NYSE: TGT), Kroger (NYSE: KR) and other chains offer similar products under private-label names like Good & Gather and Simple Truth.

Faced with steadily declining sales volume – and prodded by activist investor groups — packaged food vendors had little choice but to respond. Last month, Pepsico (NYSE: PEP) began slashing the price on Doritos, Lay’s and other salty snack brands by 15%.

General Mills (NYSE: GIS), corporate parent of Lucky Charms and Betty Crocker cake mixes, has also cut prices across two-thirds of its North American portfolio in a bid to win back customers.

Time will tell whether this reversal pays off for shareholders.

For decades, the packaged foods sector was seen as defensive… and fruitful for dividend investors. And why not? Everyone must eat. At least they did, before GLP and other weight-loss drugs dramatically curbed appetites.

Add that to the long list of macro headwinds along with raw material inflation and lingering supply chain woes. Many premium brands overestimated their pricing power and are now grappling with softening demand, eroding market share, and thinner operating margins. Hence the unappetizing financial results –and bearish analyst downgrades.

Citing “a more cautious view” for its snacks and soups, Campbell’s Company (NYSE: CPB) just posted a painful 30% drop in second quarter earnings and lowered its full-year outlook. General Mills reported an even worse 40% plunge in operating income, weighed down by “investments to improve brand marketability.”

Given the massive consumer shift to cheaper alternatives, you’d think off-brand food manufacturers would be beneficiaries. But they have their own issues. Flowers Foods (NYSE: FLO), which distributes fresh breads, muffins and other baked goods, has been cut in half over the past year. B&G Foods (NYSE: BGS), which sells everything from taco shells to salad dressing, is down 60% since April 2023.

But let’s connect the dots. If consumers are trying to stretch their dollars, the answer may not lie in manufacturing, but in retail. There’s a reason why Dollar General (NYSE: DG) opened 581 new stores last year. It remodeled 4,000 more, sprucing up interiors and adding fresh meats and produce to attract one-stop shoppers.

Between new locations and a healthy 4% bump in same-store sales, revenues climbed 6% last quarter to $10.9 billion. Net Income soared 123% to $426 million, or $1.93 per share. That triple-digit improvement was largely driven by an impairment charge this time last year. But even without that, the earnings picture is still bright.

Scaling its operating overhead over a larger base, margins are expanding and earnings are expected to climb by double-digits, approaching $7.35 per share this year.

With a deep selection of discounted price points on everyday products, Dollar General is seeing a noticeable increase in both store traffic and average transaction/basket size. And the market is taking notice. After bottoming near $70 in early 2025, the stock has since rallied 75%, closing near $122 yesterday.

But that’s still just half the former peak of $250 reached a few years ago.

Management is eying another 400-500 new store openings this year (lifting the total to 21,000+), while plowing another $1.2 billion into improvements and remodels. Keep in mind, 80% of these stores are located in small rural towns with less than 20,000 people, making DG uniquely positioned to serve under-penetrated markets.

Trading at less than 8 times operating cash flows, DG should continue to retrace some of its recent losses.

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