Grocery chains are balking at price increases from food processor suppliers and are starting to negotiate harder on price and promotional allowances, according to the Wall Street Journal.

Some retailers are using food companies' earnings reports as leverage to reject price increases, while others are pushing for more promotional allowances such as buy-one-get-one-free deals to help them move higher volumes, the WSJ quoted industry analysts as saying.

Kraft, for example, beat Wall Street forecasts with strong earnings this week. 

"As we look ahead, we're assuming our margin growth will come from volume growth and higher-margin products in the portfolio and not pricing," the newspaper quoted Kraft CEO Irene Rosenfeld as saying.

Retail grocery store prices in September were 7.6 percent higher than a year ago, according to the Bureau of Labor Statistics.

Increasingly, grocery store chains must compete with big box retailers like Wal-Mart and Target on food prices, as consumers shop for the best deals in a slumping economy.

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