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Consumers seek discounts amid rising cost of commodities


Value-minded consumers are helping McDonald’s Corp. and Wal-Mart Stores Inc. as commodity prices skyrocket, Bloomberg reported.

Energy and food costs have risen 19 percent and 4 percent, respectively, since December, and some households earning less than $75,000 a year are exercising more discretion in how they spend disposable income.

“More-persistent inflation is affecting consumer confidence,” said David Schick, an analyst at Stifel Nicolaus & Co. in Baltimore. “This may cause low- to middle-income consumers to trade down when shopping at retailers.”

Christopher Low, chief economist at First Horizon National Corp.’s FTN Financial in New York, said the shift is similar to 2008, when commodity prices soared.

“Real consumer spending began slowing gradually in November of last year and has now slowed to a standstill in the second quarter,” he said.

Wal-Mart’s discount prices are “getting more customers to show up” and spend more money while in the stores, a company executive said during the retail giant’s annual meeting on June 3. During a June 1 conference, an executive with McDonald’s said the number of people eating at the world’s largest fast-food chain is growing.

A recent Bloomberg Consumer Comfort survey showed that expectations about the outlook for the economy fell in June to the lowest level since March 2009. The U.S. unemployment rate stands at 9.1 percent.

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