(MENAFN- Atteline) Inflation is no longer a passing phase – it’s fundamentally reshaping grocery behaviour on a global scale. A survey of more than 6,000 consumers across the United States, the United Kingdom, France, Germany, Australia, and New Zealand, and the Middle East found 85% concerned about the impact of grocery inflation and rising grocery prices.

In the UAE, the Central Bank projected overall inflation at 2.3% in 2024 (up from 1.6% in 2023), while food-specific inflation softened from 3.7% in January 2024 to just 0.36% by early 2025. This moderation has eased headline pressure, but price perception and household budgeting remain front of mind for UAE consumers.

This isn’t just sentiment; it’s translating into decisive shifts in how people shop and where they spend, as households adapt to ongoing financial pressures.

These changes are driven by a potent mix of cost-of-living pressure, continued supply chain disruption, and global tariff uncertainty. Consumers are not only altering their grocery baskets, but they are also rebalancing household budgets and making trade-offs across categories. For retailers, the message is clear: staying competitive and maintaining profitability now means understanding and adapting to a new set of consumer priorities.

While inflation anxiety spans regions, perceptions of what’s driving it vary considerably, making it harder for retailers to align pricing and messaging with shopper perceptions. Nearly half (49%) of consumers blame newly introduced tariffs as the leading cause, with others pointing to the rising cost of raw materials (42%), higher labour costs in manufacturing and food processing (39%), or higher supplier and brand margins (33%).

In the UAE, where roughly 80% of agricultural products are imported, consumers are particularly sensitive to import costs, shipping disruptions, and currency fluctuations as drivers of grocery inflation. Generation adds another layer as Baby Boomers lean toward labour costs, while younger groups are more likely to cite tariffs. These differences matter, as perceptions shape trust, loyalty, and purchasing behaviour.

Consumers are acting and concerns about inflation are directly translating into changed shopping habits as 65% are buying fewer grocery items across categories, and in the UAE, more than a third (35–36%) of shoppers are using smart shopping tactics – switching to budget stores, comparing prices, or delaying purchases until promotions. The online grocery market is also surging, valued at $3.4 billion in 2024 and forecast to grow over fivefold by 2033, making digital shopping key to the inflation response.

Others are shifting to discount and wholesale formats (42%), chasing promotions (36%), or opting for own-brand alternatives (34%). This value focus is prompting many retailers to increase private-label strategies, and in some cases, tighten supplier partnerships or integrate further into their supply chains to protect affordability.

The squeeze goes beyond groceries. Spending is being cut in clothing and footwear, electronics, streaming subscriptions, personal care, and household appliances. Surveys suggest that in the UAE, consumers planning to increase spending still outnumber those planning to cut back by 13 percentage points – but discretionary categories such as fashion and electronics remain vulnerable as households protect their grocery budgets. Few consumers are unwilling to make these trade-offs to offset grocery inflation.

As this value-driven mindset hardens, trust becomes the ultimate differentiator. Retailers who align pricing, availability, and communication with consumer expectations and do so consistently will strengthen loyalty. The ability to analyze demand patterns, flex stock levels, and tailor promotions locally will be critical. With the UAE e-commerce market expected to hit $17 billion by 2025, digital loyalty programs are a powerful driver of shopper engagement and spend. For instance, while loyalty members make up just 30% of consumers online, they account for nearly half of total online retail spend (over $5.5 billion), with free delivery and discounts cited as top motivators. Moreover, 79% of UAE consumers say they’re more likely to shop frequently and stay longer if offered personalized special offers.

This is where Blue Yonder’s AI-driven demand forecasting and inventory optimisation capabilities come in, enabling retailers to maintain availability, anticipate disruption, and adapt in near real-time. Blue Yonder Cognitive Solutions enhance planning speed and agility, while driving faster inventory turns and reducing waste – even as customer needs and business demands evolve.

The challenge is set as grocery inflation is redefining value across every category and channel globally. The leaders who respond with agility, visibility, and trust will not just survive inflationary pressure – they’ll emerge as the preferred choice in a fundamentally changed market.

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