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Dive Overview:
- Vice President Kamala Harris The federal government promised to put a stop to food price gouging. She unveiled this as part of her economic policy proposals during her election campaign speech on Friday.
- Harris said the “first-of-its-kind” federal ban would include “new penalties against opportunistic companies who exploit the crisis to break the rules,” without providing details.
- FMI – The Food Industry Association criticized the claims of price gouging, and the National Grocers Association called for stricter enforcement of the Robinson-Patman Act, an antitrust law that bans price discrimination in commerce.
Dive Insights:
Harris said curbing cheap food at grocery stores would make the food industry more competitive, adding that if elected president, her administration would support small food businesses “who are playing by the rules and trying to succeed.”
“We all know that supply chains were shut down and crippled during the pandemic, causing prices to rise, but while supply chains are improving now, prices are still too high. … Many of the major food companies are making their highest profits in 20 years, and while many grocery chains are passing those savings on to customers, there are still some that are not,” Harris said.
In July, Food prices at home rose at an annual rate of 1.1 percent. Meanwhile, Consumer Price Index data released by the U.S. Bureau of Labor Statistics on Wednesday showed inflation rose to 2.9%, the lowest annual rate since March 2021. Food inflation has been slowing in recent months, though. Consumers remain concerned about food prices.
“As president, I’m going to pursue bad actors,” Harris said, citing her past experience as California’s attorney general in prosecuting companies for illegally going after prices. Ending grocery gouging is one of several economic policies she proposes, including increasing new home construction, expanding the child tax credit and lowering drug prices.
The NGA has led the charge against what it claims are practices. “Unfair and discriminatory tactics” by major food retailers and suppliers It hit independent grocers hard. He criticized Harris’ proposal..
“Our proposal to ban food price gouging is a solution to solve a problem,” NGA Chairman and CEO Greg Ferrara said in a statement.
The NGA said the government should implement Robinson-Patman legislation more strictly, reduce card swipe fees and “reduce excessive and burdensome regulation” rather than proposing new laws.
Last week, there were multiple reports that Governor Harris would announce a plan to ban food price gouging on Friday. FMI released the statement on Thursday. He said there were misunderstandings about rising food prices and industry practices.
“It is inaccurate and irresponsible to confuse illegal activities like price gouging – a defined legal term that results in specific trade practice violations – with inflation, a broad macroeconomic measure of rising consumer prices over time,” FMI President and CEO Leslie G. Sarasin said in a statement.
FMI said margins for food retailers are tight (1.6 percent last year) and the industry has been working to keep prices “as low as possible” while grappling with rising labor costs, volatile energy prices, more intense weather events, increasing regulation and supply chain issues.
Earlier this year, the Federal Trade Commission released a report stating: Food and beverage retailers’ revenues exceed costs “This suggests that the grocery industry is using inflation to boost profits at the expense of consumers. The FTC also said that large grocery retailers took steps to protect their market power in a situation where supply chains were disrupted during the COVID-19 pandemic, putting smaller retailers at a competitive disadvantage.”
The report used publicly available data and responses the bureau ordered in late 2021 from nine grocery companies, including Kroger, Walmart, Amazon and C&S Wholesale Grocers.
According to a White House analysis released earlier this year: Grocery stores maintain high profit margins The company is seeing margin declines mirror those experienced by its peers during the pandemic, while other types of retailers, such as apparel stores, are seeing margin declines.
