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Passing the buck: Dollar Tree raises prices to $1.25

Dollar Tree stores are raising prices above $1 for the first time in 35 years.
Scott Olson
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Dollar Tree stores are raising prices above $1 for the first time in 35 years.

For 35 years, the discount chain Dollar Tree committed to selling almost everything for $1. Time has come to pass the buck: Prices for most items will increase to $1.25.

Each year, the value of a dollar is eroded by inflation, making a dollar price commitment more difficult to maintain. Last month, inflation reached the highest rate since 1990.

Dollar Tree's rivals have been veering away from strict $1 prices — or even $5, in the case of Five Below. Now, the final stickler is conceding. Dollar Tree plans to roll out higher prices to all stores by early 2022.

The company has been testing higher-priced products for months, adding Dollar Tree Plus stores with products at $3 and $5. In September, the company said shoppers had a "positive customer reaction" and announced plans to try $1.25 and $1.50 at some traditional Dollar Tree locations. On Tuesday, it said that test, too, produced "overwhelmingly positive" results from undeterred shoppers.

To abide by the $1 restriction, the discount chain had to stop selling some sizes and products — which it hopes to return to its shelves.

Dollar Tree said in a statement that raising prices above $1 was "not a reaction to short-term or transitory market conditions." But Dollar Tree CEO Michael Witynski did also say in the statement that "the additional price point [affords Dollar Tree] greater flexibility to manage the overall business, especially in a volatile, inflationary environment."

Dollar stores have been among the fastest-growing chains in the U.S., adding hundreds of locations over the course of the coronavirus pandemic.

Copyright 2021 NPR. To see more, visit https://www.npr.org.

Alina Selyukh is a business correspondent at NPR, where she follows the path of the retail and tech industries, tracking how America's biggest companies are influencing the way we spend our time, money, and energy.

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