National Brands, Private Labels, and Food Price Inflation

Abstract

This article investigates the extent to which national brand and private label (store brand) prices behave differently as food price inflation changes. Empirical tests using a range of indices support the hypotheses that rising commodity and fuel prices lead to relatively larger surges in private label prices. When food prices are rising or high, the average price difference between national brands and private labels shrinks. The findings have implications for understanding the welfare effects of private labels. Moreover, they suggest that food price inflation is stronger for low-income households as food prices rise.