Target CEO Brian Cornell warned that shoppers are pulling back, even on groceries, as inflation and rising interest rates squeeze household budgets.

In an interview with CNBC on Thursday, Cornell said that the company has seen seven consecutive quarters of declining sales of discretionary items, such as apparel and toys. He also noted that in recent quarters, the number of items shoppers are buying in the food and beverage category has been declining.

“We’re seeing some trade-down behavior, even in food and beverage,” Cornell said. “People are buying fewer units. They’re still buying food and beverage, but they’re buying less of it.”

Cornell’s comments come as Target is gearing up for the crucial holiday shopping season. The company hopes to avoid a repeat of last year when it was hit with excess inventory and had to mark down prices deeply.

Cornell’s comments indicate that the economic slowdown is starting to weigh on consumer spending. Inflation is at a 40-year high, and the Federal Reserve is raising interest rates to combat it. These factors make it more difficult for people to afford to spend money.

Target is particularly vulnerable to the economic slowdown because it sells many discretionary items. These are items that people can live without, such as apparel and toys. When people are feeling financially stressed, they tend to cut back on discretionary spending first.

The fact that shoppers are even pulling back on groceries is a sign that the economic slowdown is having a real impact on household budgets. Groceries are considered a staple item, and people typically only cut back on them if they are struggling financially.

Target CEO Brian Cornell says shoppers are pulling back, even on groceries, as inflation and rising interest rates squeeze household budgets. The company is hoping to avoid a repeat of last year’s holiday season when it was hit with excess inventory and had to mark down prices deeply.