If you’re like many people these days, you often leave the grocery store wondering why
it costs so much to buy so little. Indeed, it seems like we’re paying a lot more for what used to
cost a lot less. What’s going on? Well, over the past four years, food prices have risen some 25
percent, and for some products, those increases have been steep and rapid! In fact, the price of
groceries has become a hot topic in the 2024 presidential election with both sides blaming the
other for the rise in prices. Who’s really to blame? Well, take your pick. Certainly, food prices
rose during the pandemic-induced inflationary economy, but inflation has been falling over the
past year, so much so, that the Federal Reserve appears to be moving toward a reduction in
interest rates. Yet, prices on many groceries remain stubbornly high. Some politicians attribute
the higher prices to old fashioned corporate price gouging, an accusation that could explain the
strong profits being reported by grocery store chains and producers of food products. Supply
chain disruptions and the overall cost of moving goods could also be a contributor to the
situation.
Regardless of who or what’s to blame, American consumers, even those with generally higher
wages, are feeling the squeeze. Some are choosing to forgo “extras” as way to keep costs down,
others are choosing less expensive store brands over higher priced name brands. Sales at
discount grocery outlets are also on the rise as buyers look for other ways to trim their bills. Even
so, with much of the country’s food supply being controlled by a relatively small number of
companies, trimming costs is not always easy. Moreover, despite data showing that price
increases on some products have moderated in recent months, prices overall are not dropping, a
situation which continues to frustrate buyers. It’s therefore not surprising that in an election year,
the Biden Administration has initiated policies designed to push the cost of food production
down such as increasing capacity in the meat industry and lowering fertilizer costs. Of course,
policies like these are only effective if the savings are passed along to the consumer. And, while
higher prices are encouraging some frustrated voters to sway toward Trump, many economists
suggest that his policies would cause food prices to rise, rather than fall. What does this all mean
for you? Well, it’s likely that, at least for now, you should expect to be looking for ways to
stretch your food budget.
Discussion Questions:
- Have you experienced sticker shock at the grocery store? What actions have you taken to
reduce the effect of rising grocery prices? Discuss how your budget constraint impacts the food
purchases you make. - Discuss corporate greed as it relates to higher prices at the grocery store. Do you see evidence
of price gouging? What are the implications of price gouging for overall levels of inflation?
Sources| NY Times: https://www.nytimes.com/2024/08/15/business/economy/kamala-harris-inflation-price-gouging.html; CNBC: https://www.cnbc.com/2024/05/24/why-groceries-are-so-expensive-and-how-consumers-may-see-some-relief.html; NPR: https://www.npr.org/2024/07/12/nx-s1-5037875/inflation-food-prices-grocery-supermarket-wages; Washington Post: https://www.washingtonpost.com/business/2024/02/02/grocery-price-inflation-biden/; Unsplashed: Photo by Gabrielle Ribeiro on Unsplash