Concern about companies’ inability to raise prices has spread from the board room to the halls of government.

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Good luck raising prices — even if the economy is humming.

Grocery chains have long awaited the right conditions to charge more for their products, and a broad view of the U.S. would suggest this is their moment: Unemployment is near historic lows, consumer confidence is high and inflation is inching upward.

But companies are finding they’re losing the power to hike prices. That’s because and Walmart are engaged in a battle to the death on consumer spending, while low-cost chains Aldi and Lidl pressure brick-and-mortar companies. At the same time, shoppers are becoming less loyal to legacy brand names than ever before — meaning they’ll go generic instead of paying up for labels.

“Retailers took advantage of lower food costs to push down prices, and customers became acclimated to that environment,” said Jennifer Bartashus, an analyst at Bloomberg Intelligence. “Now that inflation is returning, not only is competition in play, but customers are no longer used to seeing marginal price increases come through.”

Concern about companies’ inability to raise prices has spread from the board room to the halls of government, and policymakers are struggling to understand the dynamics as e-commerce and new business models disrupt long-standing economic theories. The Federal Reserve, charged with steering the U.S. economy, has debated technology’s relationship to inflation and pricing power.

The forces at play are illustrated by General Mills, which has acknowledged that attempted price hikes for its Progresso soup and Yoplait yogurt ultimately hurt sales. The misstep exacerbated a slump in those key businesses, as shoppers migrated to other brands. Nestlé has also experienced difficulties in getting price increases to stick.

Shifting balance

“There’s no question the balance of power has shifted,” said Gary Stibel, who runs the New England Consulting Group, which advises consumer companies. Packaged-food and consumer-product companies aren’t “creating the kind of intense” loyalties that retailers need to be able to pass on higher prices to shoppers, he said.

Consumer companies

It’s not just big food. Consumer companies are finding they’re being pinched by the same forces. Reckitt Benckiser Group’s hygiene and home division, which sells brands such as Lysol spray and Air Wick air fresheners, showed solid volume gains in the most recent quarter, but suffered because of lower prices, sending its shares plummeting. Kimberly-Clark, maker of Huggies and Kleenex, reported flat or lower prices across its categories in its latest quarterly results.

With food and consumer-products companies failing to generate buzz with shoppers, retailers are boosting investment in their own higher-margin house brands and giving shelf space to fast-growing upstarts.

Grocery challenge

Before Amazon’s purchase of Whole Foods Markets, Kroger Co. was struggling to cope with low food prices, which weighed on results. The return of inflation, however, hasn’t been a savior — in fact, already-thin margins have taken a hit as the largest U.S. grocery company has been reluctant to raise prices on customers because of the intense grocery competition.

Kroger and other grocery chains are keeping prices low to protect market share, as competition ramps up with the continued expansion of Aldi, which almost exclusively stocks private-label items. The arrival of Lidl, a longtime Aldi rival in Germany, to the U.S. last June, has only added pressure.

Convenience-store squeeze

In the U.K., Tesco and its competitors have started to push up prices to compensate for the post-Brexit weakening of the pound — but it hasn’t been able to fully pass on higher costs to shoppers. In France, competition has prevented Carrefour and Casino Guichard Perrachon from implementing price hikes.

Aldi, Lidl

The new environment is magnified in the U.S. by Walmart, which has been particularly aggressive in enacting price cuts to fend off the German discounters. A recent study of prices in Virginia and North Carolina found that a basket of items at Walmart was cheaper than at a nearby Aldi. That’s a reversal from a study conducted in December, according to Chuck Grom, an analyst at Gordon Haskett Research Advisors.

At the same time, Amazon and Walmart’s e-commerce battle has also pressured prices and forced competitors to invest in costly technology improvements and delivery services. And grocers are increasingly looking to exclusive private-label products to lock in shoppers, another headwind for big national brands.

Retailers “are no longer waiting for the companies to innovate,” Bartashus said, referring to packaged-food companies and their struggles to attract new consumers. “They’re doing some of that themselves.”