Is the grocery price war over?
Brought to its knees by a fierce discount battle, the grocery industry is starting to raise prices.
The price war was great for shoppers, many of whom cut their spending dramatically as the recession lingered. But was it good for grocery stores and food producers? Not so much.
Sales and promotions were everywhere, and as a result no company came out a winner, Reuters reported. In fact, the discounts were so deep that even the bump in sales couldn't restore the bottom line.
The average prices for consumer goods dropped 0.6% in the 12-month period ending in August, Reuters reported.
So what is causing a price truce? Rising commodity costs. The prices of commodities across the board are going up, from grains to cocoa to coffee and milk. Faced with those new pressures, some grocery stores and food producers are pulling in the discounts. Post continues after video:
Now, Reuters reports, executives are hoping for a round of price increases to build back profits and get the industry growing again.
At Wal-Mart (WMT), analysts found that a 31-item basket of goods cost $95.75 in September, up 5% from the start of the year, Reuters reported. The company appears to have abandoned its recent price-rollback strategy.
The companies that could see the greatest inflation, analysts tell Reuters, include Kraft Foods (KFT), General Mills (GIS) and HJ Heinz (HNZ).
Some companies, however, are wary of pushing prices up too quickly. "You can't indiscriminately increase pricing in this environment, now or in 2011," the chief executive of Coca-Cola(KO) told Reuters. He said the U.S. consumer is "still somewhat confused."
If prices go up, the possibility of the economy heading into a damaging deflationary period becomes more remote. But will consumers readily open their wallets to new prices?
More from MSN Top Stocks:
Copyright © 2013 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
With the universe of this category in its seasonal sweet spot, these picks have tailwinds propelling them into the new year.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.