McDonald’s and other big brands warn that low-income consumers are beginning to suffer

Some of America’s most famous corporations are saying that their consumers are feeling the pinch of inflation as prices continue to rise.

Inflation has dominated corporate America’s discourse over the past three years following monetary policy easing due to the pandemic Trillions of dollars in Covid relief, Although the pace of price increases has slowed since the Federal Reserve began raising interest rates in early 2022, consumers are still feeling the pressure – and often the tightness of the purse – as costs continue to rise. Is.

“It is clear that broad-based consumer pressure continues around the world,” McDonald’s CEO Chris Kempczinski said on the fast food chain’s earnings call early Tuesday. “Continue Consumer[d] “They should be discriminated against even more with every dollar they spend as they face higher prices in their daily spending.”

Sticky inflation has created dark cloud On how every day Americans understand the health of the economy. Consumer confidence hit its lowest level since mid-2022 in April as higher prices remained top of mind Data released on Tuesday By the Conference Board.

worker salary is is continuously increasing, As shown by the first quarter employment cost data released on Tuesday. but it is also like this Prices paid by the average consumerCut into additional income from those higher wages.

Certainly, the inflation rate has declined significantly. Consumer Price Index – a wide range of goods and services – grew at an annual rate of 3.5% in March Compared to the same month a year ago.

That’s well below the 40-year high of 9.1% seen in mid-2022, but remains above the 2% target set by the Fed, whose officials have cited stubborn inflation as a reason for keeping interest rates high.

And that stubborn 3.5% annual growth is hurting economic sentiment: Even after a period of uncontrolled inflation, prices haven’t really fallen. This is a problem for McDonald’s and many other companies that serve customers, who are feeling the sticker shock.

At McDonald’s, this was evidenced by growth in same-store sales a little bit down Where Wall Street expected. Kempczinski said the Chicago-based company needs to be “laser focused” on the affordability of bringing in diners.

executive officer at 3MThe maker of Scotch tape and Post-It notes, which also reported Tuesday, told analysts it sees “continued softness in consumer discretionary spending.” While 3M earnings and revenue topped expectations in the first quarter, management said it expects consumer spending to be “muted” this year.

Last week, Newell Brands CEO Chris Peterson joined the group of executives who cited inflation as the main force impacting their business. Although the owner of Coleman and Rubbermaid products beat analyst forecasts for the first three months of the year, it issued soft guidance for current quarter earnings and said revenue was likely to decline.

“The categories we compete in are under pressure as consumers are carefully managing their discretionary spending as the cumulative impact of inflation on food, energy and housing costs has outpaced wage growth,” Peterson said.

But not all consumer-facing companies are feeling the heat.

Colgate Palmolive- CEO Noel Wallace said last week that volume growth had largely returned as “inflation has become more benign and pricing has begun to stabilize.”

But Coca-ColaManagement has seen consumers focusing on value. Still, executives said on the soft drink maker’s earnings call Tuesday morning that the U.S. consumer is “in good shape.”

— CNBC’s Robert Humm and Amelia Lucas contributed to this report.