Amazon appears to be cutting back prices at Whole Foods again, after rolling out a broader price hike earlier this year.

As of August, Whole Foods prices are down roughly 2.5% on average compared with last year, according to a note published by Morgan Stanley on Tuesday. The drop in price follows a 3% price increase in the first three months of this year, the note said.

The modest price cut is the latest shift in strategy at Whole Foods, which Amazon bought for $13.7 billion in 2017. The grocery chain put in place a series of price decreases since the acquisition, as it looks to shed its image of being an expensive retailer and expand its customer base. But it was forced to increase prices on hundreds of products earlier this year after suppliers complained about rising costs, The Wall Street Journal reported in February.

The Morgan Stanley note said that Whole Foods' pricing premium to other grocers has fallen since the acquisition. Whole Foods used to be roughly 20% more expensive than other regional conventional grocers, the note said, but the price difference has fallen to the 12% to 13% range now. Kroger, for example, used to be almost 40% cheaper than Whole Foods on average, but now only has a 27% price advantage on average, the note said.

Amazon reported last quarter that its physical stores segment, mostly comprised of Whole Foods sales, saw flat revenue growth at $4.3 billion. That number would have seen roughly 5% growth if the company had accounted for in-app purchases or pick-up orders, which were included in Amazon's online sales segment instead, the company said.

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