What?s in a name? Discount store Dollar Tree raises prices to $1.25

Dollar Tree, a popular store among bargain shoppers in the US, has a small name problem in these inflationary times.

It plans to raise its prices from a dollar for typical items to $1.25, the company announced on Tuesday.

The retailer will introduce the new price point in more than 2,000 stores by December and complete the rollout across all of its 8,000 stores by the first quarter of 2022.

For 35 years, the company has managed to hold down prices through inflationary periods.

Dollar Tree is making its pricing increase amid the trend of rising inflation in a growing US economy, which in recent months has increasingly affected low-cost retailers that are struggling to maintain low prices.

But in a statement, Dollar Tree said: "The Company believes this is the appropriate time to shift away from the constraints of the $1.00 price point in order to continue offering extreme value to customers. This decision is permanent and is not a reaction to short-term or transitory market conditions."

Michael Witynski, the company's president and CEO, added: "Our Dollar Tree pricing tests have demonstrated broad consumer acceptance of the new price point and excitement about the additional offerings and extreme value we will be able provide."

Although some items in its stores cost more than $1 and can be found in the $3-$5 range, Dollar Tree is predominantly known for its goods that sell at the $1-per-unit price point.

In addition to seasonal decorations, the retailer sells a variety of household products ranging from paper plates, stationery and beauty supplies.

In a poll conducted by the company, 77% of shoppers indicated they were almost immediately aware of the new price point when visiting the store.

The company's third-quarter net income totaled $216.8m, down from $330m the previous year.