And vice presidential candidate Kamala Harris is trying to get people to vote for her in the grocery store by saying that she is the only one who can lower food prices for Americans.
Harris unveiled her economic plan this week, which includes a call for a government ban on price gouging. This would stop grocery stores, food suppliers, and other businesses from allegedly charging customers more for the same things.
In light of the fact that many grocery shops and other stores are lowering their prices, the question is how much of a difference such a ban would really make for regular Americans.
“A lot of the big food companies are making more money than they have in 20 years.” Some grocery stores still don’t pass on these saves, the Democratic nominee said in a speech in Raleigh, North Carolina, on Friday. “Listen, I know that most businesses are doing the right thing by hiring people, helping the economy, and following the rules. But some aren’t, and that’s wrong. When that happens, we need to do something.”
Harris said her plan would have penalties “for companies that take advantage of crises and break the rules.”
Some people who fight for consumers say that shoppers need to be protected across the country from companies that use inflation as a reason to make more money. More and more companies have lowered their prices, which Liz Zelnick, head of economic security and corporate power at Accountable.US, a left-leaning watchdog group, says “showed they could have done this a lot earlier and passed along the savings to consumers.”
Skeptics, on the other hand, don’t believe what Harris says. A ban on price gouging is not a good idea, even if some people like the sound of it. According to Allison Schrager, senior fellow at the right-leaning Manhattan Institute, a ban would not bring prices down much. That’s all it would do, she said, except make food stores less likely to open in places that need them.
Schrager said, “Those prices are not going back unless you want the grocery store worker, the truck driver, and the farmer to get a 2019 wage.”
A few days before Harris’s plan, the consumer price index for July showed that yearly inflation was 2.9%, with grocery prices rising 1.1% year over year. Inflation rates hit their highest level in four decades in 2022. On Wednesday, the CPI showed that the general average fell below 3% for the first time since 2021.
Former President Trump, on the other hand, has said that the rise in prices happened during the Biden-Harris era.
The campaign for the Republican nominee said that the plan to stop price gouging is “part of Harris’s desperate attempt to wipe off the smell of Bidenomics.”
The campaign said, “In reality, she can’t shake Bidenomics because she was the one who planned the skyrocketing inflation, unbearable gas prices, an overpriced housing market, and the end of the American Dream from the start.”
BLS figures show that grocery prices were 13.5% higher year over year in August 2022, which was their highest point.
Prices are still very high, even though inflation rates have gone down. Early this summer, 37% of people who answered a survey by the Census Bureau said they were having trouble paying for normal living costs.
Why do people raise prices?
Price gouging is against the law in almost 40 states, but not at the federal level. That is what Harris wants to change.
Lawyer Trish Conners, a shareholder at Stearns Weaver Miller Weissler Alhadeff & Sitterson, said that the current laws were first made in response to natural disasters like storms. They were put to the test again during the early stages of the COVID-19 pandemic.
The state attorneys general were in charge of making sure these rules were followed. Harris was California’s attorney general from 2011 to 2017. On Friday, she said that several of the cases she had worked on involved companies that had raised costs of medicine and electronics without permission.
Price-gouging rules were different for each state, but they all applied during declared states of emergency and were mostly about basic goods, according to Conners, who worked as an attorney general in Florida for more than 30 years and held important positions, such as chief deputy.
But some state laws didn’t say what was necessary, and different laws had different definitions of price gouging, she said.
By law, price gouging happens in California when many goods and services’ prices go up by more than 10% after a state of emergency is announced. That’s what Florida law says happens when the prices of important goods go up “unreasonably.”
So is price gouging going on right now? Conners said that there are different legal standards and different points of view that aren’t in the law books.
She said, “If there is price gouging going on, it’s a whole different definition.” Some people think it’s price gouging when a business uses inflation as a reason to raise prices when they don’t need to. That’s not how price gouging is defined by the law in most states right now.
Zenknick thinks that phrases like “price gouging” and “greedflation,” which is what consumer advocates call the practice of companies raising prices to make more money, mean the same thing.
“These prices are going up and up because they are above and beyond the normal costs of doing business.” Zelnick said, “Just because the market lets it happen doesn’t mean it’s right.” The policies are meant to stop the same type of bad behavior, no matter what it is called.
She also said that a federal ban would make the rules the same all over the country, instead of the present “scattered state-by-state solution.”
Do some shopping stores keep food costs high?
The Harris campaign says that some big food stores have kept prices high even though the cost of making goods has leveled off.
That was also said by Zelnick. During earnings calls, big consumer companies talked up their ability to raise prices even though inflation rates were high, which is accountable.A US study from last year.
One of the people who runs the food business news site SupermarketGuru.com, Phil Lempert, said it’s not that simple.
He said that the shopping business has low profit margins. He said that before the pandemic, big grocery stores made a net profit of 1% to 1.5%. Since then, the number has only gone up a little.
Large companies have become good at making packaged goods and passing the cost on to stores, who then have to pass the cost on to customers. This is what Lempert said caused prices to be so high right now.
Lempert also said that instead of a ban, it would be better to go after “opportunistic pricing” and cases of “shrinkflation,” which is when people pay the same or more for smaller items.
From February 2024: Lawmakers want to punish businesses for “shrinkflation,” which means that customers are paying more for smaller packages.
Before Harris’s speech, her campaign said that the meat processing business was one place where prices were not fair. Trade groups in the industry denied the claim.
“Harris’s campaign rhetoric is unfair to the meat and poultry industry and doesn’t match the facts,” said Julie Anna Potts, President and CEO of the Meat Institute.
“From their peak during the pandemic, food prices keep going down.” “The price of meat depends on how much people want it,” Potts said. “Prices at the meat case are affected by things like avian flu, a lack of beef cattle, and high costs of inputs like energy and labor.”
The BLS says that ground beef by the pound cost about $5.50 on average in July. The price has been above $5 since the middle of 2023. Last month, a box of Grade A eggs cost an average of $3. This is less than the over $4.80 it cost in January 2023, when flu spread to birds.
What has the Biden government done to make food cheaper?
Zelnick said that the Biden administration has been focusing on lowering the costs of everyday life, such as by working to get rid of “junk fees” and the Federal Trade Commission’s objections to Kroger’s KR 0.57% plan to buy AlbertsonsACI 1.91%. No matter what the government does, she said, unfair price hikes are a sign of business greed.
A spokesman for Kroger said that the company would lower prices by $1 billion if the deal went through. A Kroger representative said, “Once the merger is complete, Kroger will spend $1 billion to bring down Albertsons’ prices. This is in line with Kroger’s history of fighting inflation and giving customers good value.”
Harris said on Friday that her government would “help the food industry become more competitive” if she were elected.
“You and your families will save money because there is more competition,” she said.
Schrager, a senior fellow at the Manhattan Institute, said that the federal government “doesn’t have much control over price, and they shouldn’t.”
She said it has to do with how supply and demand work in the market. If anything, the extra cash that the Biden administration gave people through laws like the 2021 American Rescue Plan made it easier for them to pay, which caused costs to go up. “It’s not all because of inflation, but it did make it worse,” she said.
Attorney General Lempert said that politicians and regulators can use the law to try to bring down prices. But big things like the cost of hiring people and the effects of climate change change the rules all the time, he said.
“The truth is that food prices will never be the same as they were five or ten years ago,” Loempf said.
