Kroger downgraded by BMO due to food deflation

An employee stocks Greek yogurt in a Kroger supermarket in Peoria, Illinois.
Daniel Acker | Bloomberg | Getty Images

BMO on Tuesday lowered its rating on Kroger to market perform from outperform, saying the company will suffer from the recent decline in food prices.

"We believe the magnitude of the grocery deflationary pressures ... are too hard to ignore and make share price outperformance difficult given the pressure on SSS and associated deleveraging impact on the income statement," analyst Kelly Bania wrote in a note to clients.