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Demand for french fries reflects resilient consumer as so-called fry attachment rate holds steady

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A McDonald’s crew member prepares french fries in Miami, Florida.

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It’s a timeless question at fast-food counters: Do you want fries with that?

Responders continue answering affirmatively at a higher-than-average rate, a top potato supplier indicated. It underscores the resilience of consumer spending, even as inflation pinches pocketbooks and pandemic savings dry up.

A larger share of customers keep adding the iconic side to meal orders than in the past, according to frozen potato supplier Lamb Weston. Looking at the bigger picture, strength in the so-called fry attachment rate bolsters economic data, showing the willingness of average Americans to still shell out for everyday luxuries.

“The fry attachment rate has stayed pretty consistent,” said CEO Thomas Werner during the company’s earnings call on Thursday. “It’s been above historical levels for the past two, three years.”

This is just one example of how consumers keep purchasing despite mounting reasons to tighten purse strings, a phenomenon that’s puzzling economists.

Spending on retail and food services in America topped $700 billion in February, according to advance and adjusted government figures. That’s about 1.5% higher than the same month a year ago. And it’s a whopping 38.5% higher when compared with February 2019.

Rising wages and fiscal stimulus measures padded bank accounts during the early years of the Covid-19 crisis, prompting increased purchasing. But in more recent years, U.S. consumers have felt increasing pressure amid runaway inflation, elevated interest rates and the end of pandemic-era financial benefits.

And experts have been surprised by the unwavering propensity of Americans to use their cash, even as consumer confidence sours and fears of an economic downturn swirl. The choice to add french fries provides one case study of what some have dubbed “YOLO” or “revenge” spending, with the first term named after the acronym for “you only live once.”

Slowdown elsewhere

To be sure, there are signs of financial stress on consumers that impact monetary decisions around food. WK Kellogg CEO Gary Pilnick told CNBC earlier this year that cereal was trending as a dinner alternative while shoppers grappled with higher grocery costs.

Though customers still opt for fries, Werner said Lamb Weston’s volume took a hit nonetheless due to softer foot traffic overall in the restaurants it serves. That slide comes as consumers grow accustomed to increased prices for menu items as a result of inflation, the executive said. (Lamb Weston provides potatoes for large chains such as McDonald’s and Chick-fil-A, though Werner did not specify which companies are experiencing slowdowns.)

“On the one hand, fries remain as popular as ever with consumers,” Werner said. “But on the other hand, consumers are going out to eat less often.”

Lamb Weston on Thursday reported adjusted earnings and revenue for the fiscal third quarter that came in below estimates of analysts polled by FactSet. The Idaho-based company’s outlook for full-year performance on both financial measures also missed Wall Street forecasts.

Shares tumbled more than 19% in Thursday’s session, touching lows not seen in more than a year.

Correction: This article has been updated to remove an inaccurate reference to the timing of the Covid pandemic. This article was also updated with the correct spelling of Chick-fil-A.

Economics

UK inflation September 2024

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The Canary Wharf business district is seen in the distance behind autumnal leaves on October 09, 2024 in London, United Kingdom.

Dan Kitwood | Getty Images News | Getty Images

LONDON — Inflation in the U.K. dropped sharply to 1.7% in September, the Office for National Statistics said Wednesday.

Economists polled by Reuters had expected the headline rate to come in at a higher 1.9% for the month, in the first dip of the print below the Bank of England’s 2% target since April 2021.

Inflation has been hovering around that level for the last four months, and came in at 2.2% in August.

Core inflation, which excludes energy, food, alcohol and tobacco, came in at 3.2% for the month, down from 3.6% in August and below the 3.4% forecast of a Reuters poll.

Price rises in the services sector, the dominant portion of the U.K. economy, eased significantly to 4.9% last month from 5.6% in August, now hitting its lowest rate since May 2022.

Core and services inflation are key watch points for Bank of England policymakers as they mull whether to cut interest rates again at their November meeting.

As of Wednesday morning, market pricing put an 80% probability on a November rate cut ahead of the latest inflation print. Analysts on Tuesday said lower wage growth reported by the ONS this week had supported the case for a cut. The BOE reduced its key rate by 25 basis points in August before holding in September.

Within the broader European region, inflation in the euro zone dipped below the European Central Bank’s 2% target last month, hitting 1.8%, according to the latest data.

This is a breaking news story and will be updated shortly.

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Economics

Why Larry Hogan’s long-odds bid for a Senate seat matters

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FEW REPUBLICAN politicians differ more from Donald Trump than Larry Hogan, the GOP Senate candidate in Maryland. Consider the contrasts between a Trump rally and a Hogan event. Whereas Mr Trump prefers to take the stage and riff in front of packed arenas, Mr Hogan spent a recent Friday night chatting with locals at a waterfront wedding venue in Baltimore County. Mr Hogan’s stump speech, at around ten minutes, felt as long as a single off-script Trump tangent. Mr Trump delights in defying his advisers; Mr Hogan fastidiously sticks to talking points about bipartisanship, good governance and overcoming tough odds. Put another way, Mr Hogan’s campaign is something Mr Trump is rarely accused of being: boring. But it is intriguing.

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Economics

Polarisation by education is remaking American politics

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DEPENDING ON where exactly you find yourself, western Pennsylvania can feel Appalachian, Midwestern, booming or downtrodden. No matter where, however, this part of the state feels like the centre of the American political universe. Since she became the presumptive Democratic presidential nominee, Kamala Harris has visited Western Pennsylvania six times—more often than Philadelphia, on the other side of the state. She will mark her seventh on a trip on October 14th, to the small city of Erie, where Donald Trump also held a rally recently. Democratic grandees flit through Pittsburgh regularly. It is where Ms Harris chose to unveil the details of her economic agenda, and it is where Barack Obama visited on October 10th to deliver encouragement and mild chastisement. “Do not just sit back and hope for the best,” he admonished. “Get off your couch and vote.”

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