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Kamala Harris Proposes An End To Grocery “Price Gouging.” Industry Advocates Say, “What Gouging?” | Finks AI

Groceries have found a new diet — your wallet — and they’re eating it alive. Since 2019, the cost of groceries has increased by 27%, and US presidential candidate Kamala Harris thinks she’s found a solution — one that’s stirred up more controversy than other proposals in her administration’s economic plan revealed last Friday.

No funny business: Ask food industry groups why costs have surged, and they’ll blame the supply chain. Ask everyday Americans, and over half will blame greedy corporations. Harris, tapping into that sentiment, has proposed a federal ban on food price-gouging, including controls to prevent big corporations from “exploiting” consumers by “illegally” hiking prices. The proposal has elicited mixed reactions.

Consumer advocacy groups praised the proposal, saying that years of M&A activity have created a less competitive and higher-cost environment for food and groceries.
Meanwhile, food industry groups criticized the insinuation that consumers are being gouged, with FMI’s Andy Harig calling the proposal an “oversimplification” (WSJ).

Where’s the Gouging?

Researchers are mixed on whether food businesses coordinated efforts to raise prices to boost profits, but grocery store margins tell a different story. In their latest quarterly reports, Costco, Walmart, and Kroger reported net margins of just 2.8%, 2.34%, and 1.43%, respectively.

Target CEO Brian Cornell says groceries are a “penny business,” referring to the industry’s notoriously low margins — a factor worsened by Big Tech.
This has driven more retailers to launch their own higher-margin private-label brands, with Target announcing yesterday that it would release 150 private-label items.

What’s the deal then? Given the specifics of Harris’s proposal, most companies shouldn’t have much to fear. Similar laws already exist in 38 states, prohibiting retailers from hiking prices during emergencies — even in blue states like California and red states like Texas. However, in its current form, Harris’s vague proposal doesn’t do much to solve the underlying problems with retailers and the food industry.

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Kamala Harris Proposes An End To Grocery “Price Gouging.” Industry Advocates Say, “What Gouging?”

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Where’s the Gouging?