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Diving certificate:
- Vice President Kamala Harris promised a nationwide ban on price gouging on food as part of the planned economic policy that she announced on Friday in a speech as part of her presidential election campaign.
- Harris said her “first” federal ban would include “new penalties for opportunistic companies that exploit crises and break the rules.” She did not provide further details.
- FMI – The Food Industry Association sharply criticized price gouging and the National Grocers Association called for stronger enforcement of the Robinson-Patman Act, an antitrust law that prohibits price discrimination in retail.
Diving insight:
Harris said banning price gouging in grocery stores would help the food industry become more competitive. She added that if elected president, her administration would support smaller food companies “trying to play by the rules and get ahead.”
“We all know that prices went up during the pandemic as supply chains shut down and failed, but our supply chains have since improved and prices are still too high. … Many of the major grocery companies are reporting their highest profits in two decades, and while many grocery chains are passing on those savings, others still aren’t,” Harris said.
In July Food prices rose by 1.1% annually while inflation rose 2.9% – the lowest level since March 2021, according to consumer price index data released Wednesday by the U.S. Bureau of Labor Statistics. Although food inflation has eased in recent months, Consumers remain concerned about food costs.
Harris referred to her previous experience as California’s Attorney General, where she prosecuted companies for illegal price increases: “So believe me, as president, I will take action against the perpetrators.” The ban on price gouging in the grocery trade is one of several economic policy measures that, according to Harris, also include increased construction of new housing, expanded child tax credits and lower drug prices.
The NGA, which has led a crusade against what the group sees as “unfair and discriminatory tactics” by major food retailers and suppliers that harm independent food retailers, criticized Harris’ proposal.
“The proposal to ban gouging in grocery stores is a solution in search of a problem,” NGA President and CEO Greg Ferrara said in a statement.
The NGA said that instead of drafting new laws, the government should more strictly enforce the Robinson-Patman Act, reduce card-reading fees and “curb excessive and burdensome regulations.”
There were numerous news reports last week suggesting that Harris would announce a planned ban on price gouging in grocery stores on Friday. FMI released a statement on Thursday He said there were misconceptions about food price inflation and industry practices.
“It is both inaccurate and irresponsible to confuse an illegal activity such as price gouging – a defined legal term that describes specific violations of trade law – with inflation, which is a broad macroeconomic measure of the increase in consumer prices over time,” FMI President and CEO Leslie G. Sarasin said in the statement.
According to FMI, profit margins in grocery retail are low — they were 1.6 percent last year — and the industry is working to keep prices “as low as possible” while contending with rising labor costs, fluctuating energy prices, more frequent storms, more regulations and supply chain issues.
Earlier this year, the Federal Trade Commission published a report claiming Revenues exceeded costs for food and beverage retailers in recent years, suggesting that the grocery industry is using inflation to boost its profits at the expense of consumers. The FTC also said large grocers had taken steps to shield their market power in the face of supply chain disruptions during the COVID-19 pandemic that put smaller retailers at a competitive disadvantage.
The report used publicly available data and responses the agency commissioned from nine grocery companies in late 2021, including Kroger, Walmart, Amazon and C&S Wholesale Grocers.
A White House analysis published earlier this year found that Grocery retailers have maintained higher profit margins While other types of retail, such as clothing stores, have seen margins collapse, they have experienced a decline during the pandemic.
