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Instacart Fees Up 24% in January YoY; CEO ‘Worried’ Inflation May Push Them Higher

Instacart is facing steep challenges with rising inflation making food more expensive, according to a Bloomberg report.

Many kinds of meals are getting more expensive, with common ingredients like beef, olive oil and flour seeing double-digit price increases compared with last year.

The inflation has worked to push the disposable income spent on food in 2021 to the highest it’s been in decades now. Total customer fees, excluding discounts, were 24% higher in January than a year earlier. Most of the increase comes from service fees, which were 45% higher than last year and 61% more than in 2019, according to market research firm YipitData.

Instacart CEO Fidji Simo said he’s “worried” with inflation “definitely hitting” Instacart. He said the model of the company is that the grocer sets the price, so the price is then reflected by Instacart back to the customer.

Instacart also carries other costs, though, including a delivery fee starting at $3.99 and which can go higher to get an order to the door faster.

Then there’s a service fee that can be added to support Instacart operating costs. While tips go to the couriers, service and delivery fees go to Instacart, the report said.

With the rise in prices, Simo says customers have been making adjustments, changing their orders and focusing on the more essential items.

If there’s more inflation, it could do more damage to the company, he said.

“We are in a period of complete instability, and so anything that kind of disrupts these supply chains can have a direct impact on both prices and availability,” Simo said, according to the report.

Read more: Instacart Beefs up Shopper Support as Gig Model Faces Scrutiny

PYMNTS wrote that Instacart has been debuting new features to support its in-store pickers, to revise the image of its labor model.

The features announced include phone support on its Shopper app, which will let shoppers speak with a rep. And the company has added a safety toolkit for alerts, emergency calling and incident reporting.

And there will be a navigation feature with an interactive map of the store.

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