CNN — This is another sign that the economy is slowing down.
Procter & Gamble, the maker of Tide, Dawn, Bounty and other major household brands, warned on Friday that consumers were starting to cut back on spending as inflation concerns mount.
P&G posted 7% sales growth in its most recent quarter ending June 30, its strongest growth in years. The company was able to charge higher prices to consumers. But its sales volumes fell 1% last quarter, a sign consumers were calling back.
The company expects sales growth of between 3% and 5% for its next fiscal year, compared to 7% in its last fiscal year.
In a call with analysts on Friday, P&G executives said that while consumers were still buying basic necessities, they were starting to change their buying behavior.
For example, consumers are not filling their pantries as much as they were at the start of the pandemic, and they are buying more house brands, especially in paper goods.
As shoppers are “more exposed to inflation in general in the market with the highest inflation in 40 years, it would be naive to assume that the consumer is not watching their cash spending,” the director told analysts. P&G financial, Andre Schulten.
P&G stock fell about 5% at midday Friday.
The consumer giant is the latest company to warn of tightening consumer spending, a worrying sign for the US economy. The highest inflation in over 40 years has taken its toll and consumer confidence has fallen three months in a row.
Walmart and Best Buy said this week that many shoppers have cut spending on discretionary goods such as clothing and electronics to focus on paying for essentials.
“Rising levels of food and fuel inflation are affecting how customers spend,” Walmart CEO Doug McMillon said Monday.
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