U.S. discount retailer Dollar Tree raises prices to 1.25 USD amid inflation pressures

People shop in a grocery store in Washington, D.C., the United States, on Nov. 10, 2021. (Photo by Ting Shen/Xinhua)

Analysts said the new price change signaled that U.S. retailers are passing higher costs to customers amid the supply chain bottlenecks.

WASHINGTON, Nov. 23 (Xinhua) -- U.S. discount retailer Dollar Tree said on Tuesday that the company would raise prices from 1 U.S. dollar to 1.25 dollars on the majority of its products by the first quarter of 2022 amid broad inflation pressures.

"For 35 years, Dollar Tree has managed through inflationary periods to maintain the everything-for-one-dollar philosophy that distinguished Dollar Tree and made it one of the most successful retail concepts for three decades," the company said in a statement as it released the financial results for its third quarter ended Oct. 30.

However, the company believed that this is the "appropriate time" to shift away from the constraints of the one-dollar price point in order to continue offering extreme value to customers.

The 1.25-dollar price point, which will apply to a majority of Dollar Tree's assortment, will enhance the company's ability to materially expand its offerings, introduce new products and sizes, and provide families with more of their daily essentials, the company said.

"Lifting the one-dollar constraint represents a monumental step for our organization and we are enthusiastic about the opportunity to meaningfully improve our shoppers' experience and unlock value for our stakeholders," Michael Witynski, president and chief executive officer of Dollar Tree said in a statement.

The company plans to introduce the new price point in more than 2,000 additional legacy Dollar Tree stores in December and complete the rollout to all stores by the end of the first fiscal quarter of 2022.

"This decision is permanent and is not a reaction to short-term or transitory market conditions," the company said.

Dollar Tree was among the last of the major U.S. dollar-store chains to retain the one-dollar price. Analysts said the new price change signaled that U.S. retailers are passing higher costs to customers amid the supply chain bottlenecks.

The consumer price index (CPI) rose 6.2 percent in October from a year earlier, the strongest annual gain in over 30 years, according to the U.S. Labor Department.