Spending at discount stores spiked up to 65% this month, and it shows that shoppers are hunting for better deals as inflation bites

• Shoppers are flocking to discount stores as inflation hits 30-year highs.
• Credit and debit card transaction data from Facteus showed that sales rose by 65% in this sector.

Cash-strapped shoppers are flocking to discount stores as inflation bites.

According to credit and debit card transaction data from Facteus, first reported by Bloomberg, spending at discount stores jumped by 65% in the week ending November 7 versus the same period in 2019. That was the largest jump in discount store spending since March, when government stimulus checks were sent to millions of US households, boosting sales at retailers.

Discount store spending was up 21% from the week before, according to Facteus.

Discount stores - chains such as Dollar General and Dollar Tree - saw the retail sector's largest increase in spending by far, according to the data, indicating that shoppers are favoring deals and discounts in today's inflationary environment. The data also doesn't account for all the shoppers that paid in cash, which is common in low-cost stores.

Discount or dollar stores, which offer prices at $10 and under, typically thrive in uncertain economic times. With the annual rate of inflation accelerating at its fastest rate in more than 30 years in October, they are in a prime position to benefit.

Still, these chains are also under pressure to keep prices down and stay competitive as their overheads soar.

Dollar Tree, the last remaining major chain to stand by its $1-and-under promise, said it would be breaking the buck in September and adding new $1.25 and $1.50 price points.

At the time, the company justified the new price points by saying they would enable it to offer a wider assortment of products. However, in earlier earnings calls, executives admitted that higher shipping and raw material costs were putting a strain on earnings and that the company was more sensitive to these costs than its competitors because of its $1 promise.

Prices have been slowly creeping up at rival chains. Recent price checks at Family Dollar and Dollar General stores, which were done by Gordon Haskett analyst Chuck Grom, revealed that popular products such as Coca-Cola or Lay's potato chips saw price increases of between $0.50 and $1.50 versus the year before.