While costs to produce items are now apparently falling for grocery retailers across the country, many wonder why the prices of essential items at the grocery store have remained so high.
Now, the US Federal Trade Commission (FTC) Chair is pushing to open an investigation into industry players that will require them to provide information on their expenses and prices on everyday items to see if these continuing high prices are justified.
Investigation Announcment
During a public meeting with Justice Department officials, FTC Chair Lina Khan announced a push for an investigation into customer supermarket prices.
“We want to make sure that major businesses are not exploiting their power to inflate prices for American families at the grocery store,” said Khan.
Prices Surging
According to data from the Consumer Price Index in the US, food prices rose 25% between 2019 and 2023.
This rate has outpaced other goods and services, and an FTC study previously showed that prices rose for US consumers by 11% between 2021 and 2022. At that same time, food retailers experienced a 6% gain in profit.
Top Concern
Khan relayed that she often hears from those critical of grocery prices as they struggle to make ends meet.
“One of the top concerns I consistently hear about is high grocery prices every week. People stock up on the food that they need to feed their families,” Khan said. “And too often, people feel like too much of their paycheck is going towards covering the basics like meat or bread or eggs.”
Election Considerations
As the Biden-Harris administration heads closer toward the presidential election, the state of the economy and food prices have become a major theme.
A Data for Progress survey published earlier this year found that 57% of voters, the largest voter group among those surveyed, said they were most worried about the cost of food and groceries as their top concern.
Officials Taking Notice
The feeling among the American public about high food prices has not been missed by government officials.
A survey conducted recently found that 93% of senior Capitol Hill staffers said that grocery and food prices will be the #1 economic issue that voters will be thinking about in the general election.
Costs Coming Down
During the public meeting, Khan asserted that the probe into the country’s grocery retailers would “shed light” on why both prices of goods and profits of grocery store chains “remain so high even as costs appear to have come down.”
Khan insists that many items are still too costly, which could be the result of grocery store chains taking advantage of events like the pandemic and inflation as an excuse to increase prices and rake in profits.
Supply Influence
In March of this year, the FTC released a report that showed the pandemic had hurt smaller grocery stores while prompting large companies to implement steps to consolidate power through a stranglehold on supply chains.
“The pandemic also prompted some larger firms to consider buying manufacturing suppliers, which potentially threatens to make certain supply chains even more concentrated in the future,” said an FTC press release. “The report’s findings reveal how supply chain bottlenecks can leave markets exposed to major supply chain shocks—and that those shocks, in turn, can allow major firms to entrench their dominance.
Motivations in Doubt
At the time, the report cast doubt on the excuse from retailers that they were raising prices purely because of the economic consequences of the pandemic.
“Food and beverage retailer revenues increased to more than 6% over total costs in 2021, higher than their most recent peak in 2015 of 5.6%,” said an FTC statement. “In the first three-quarters of 2023, retailer profits rose even more, with revenue reaching 7% over total costs, casting doubt on the assertions of some companies that rising prices at the grocery store are the result of retailers’ own rising costs.”
No Names
Although Khan is set to ask the FTC to start the inquiry, she did not name any key players in the industry.
If the probe is started in earnest, big names like Walmart, Target, Amazon, Costco, and Kroger could be under the crosshairs.
Online Reaction
Many commenters were supportive of the FTC’s move to target grocery retailers, who felt they had been raising prices out of greed for what they could get away with.
“Work for kroger. Greed. The reason is greed. I watched a 20-40% jump in my department’s prices over the course of 2 months, back in feb/march,” said a Reddit user. “It was in anticipation of continued inflation, which didn’t materialize, but prices took a big jump anyway and have only gone up since. There have been zero price corrections or reductions.”
Player Dominance
Others felt the problem lay with just a few industry players, who seem to have a dominating presence in the grocery retail space.
“Maybe we can start by having more than 6 companies running the entire industry,” one Reddit user said.
