In times of high inflation, everything goes in the grocery store business

In the middle of a long que to get to the cashier at D-Watson right at the beginning of Ramzan, the hushed conversations between strangers waiting their turn was heavy with discontentment. “Three bananas, a handful of grapes, some green chillies and lemons for Rs 500,” muttered one mother-of-four, disapprovingly addressing no one in particular. 

The murmurings spread fast through the lines. Inflation has hit everyone hard. And while the poorest segments of society have been hit the hardest, shoppers at up-scale grocery stores have not been spared either. Everyone is reeling from record food inflation which touched 45.1% by the end of February 2023, and hit an all-time high of 46.7% as measured by the Pakistan Bureau of Statistics. 

But in the same line at D-Watson, perhaps one of the most interesting comments made in passing was by another woman in the line: “Superstore walon ki to aj kal mouj hogi (the superstore businesses must be striving these days).” 

This poses an essential question. Since the demand for food is inelastic, meaning it never goes down since it is a basic necessity, does that mean businesses selling these items thrive in times of great inflation? That might be the answer one immediately arrives at but the reality is more complicated. And it goes to the heart of how the grocery store business works.