From Our Print Edition

It wasn’t exactly the shot heard ‘round the world. But vice president Kamala Harris’ promise of a federal ban on grocery price-gouging if she wins the presidency sure did grab the attention of the food industry. Although Harris didn’t share many details, she said the first-ever ban would include “new penalties for opportunistic companies that exploit crises and break the rules.

“We all know that prices went up during the pandemic when supply chains shut down and failed,” she said. “But our supply chains have now improved and prices are still too high… Many of the big food companies are still seeing their highest profits in two decades, and while many grocery chains pass along these savings, others still aren’t.”

Harris’ comments echo the findings of both a Federal Trade Commission report and White House analysis that showed food industry revenues have outpaced costs in recent years and that retailer and manufacturer profit margins remain at pandemic levels while margins in other industries such as apparel have fallen. But industry insiders say that doesn’t necessarily point to price-gouging.

FMI PUSHES BACK

Leslie Sarasin, president and CEO of FMI — The Food Industry Association, was among the first to respond to Harris’ pledge. Here’s an excerpt from her statement:

“The entire food industry works tirelessly — amidst fierce competition — to address inflation and keep prices as low as possible to meet the needs of shoppers. However, the food industry continues to face significant economic headwinds — including increases in labor costs, volatile energy prices, an uptick in climate change-related severe weather events, supply chain challenges, and an unprecedented level of regulatory burden — that increase the costs to produce food and get it to store shelves.

“It is both inaccurate and irresponsible to conflate an illegal activity like price-gouging — a defined legal term in which specific violations of trade practices law occur — with inflation, which is a broad, macroeconomic measure of increases in consumer prices over time due to supply chain cost pressures. In the context of food, inflation impacts how far the dollar goes when buying groceries.”

Meanwhile, Sarasin’s counterpart at the National Grocers Association, president and CEO Greg Ferrara, called Harris’ promise “a solution in search of a problem.” Instead of focusing on price-gouging, he suggests the administration take a closer look at “anti-competitive behaviors,” including price discrimination prohibited by the Robinston-Patman Act.

WHAT’S YOUR TAKE?

Despite public protestations to the contrary, we’ve heard from plenty of folks off-the-record that some retailers and manufacturers are, indeed, using inflation as cover for price increases. Small manufacturers blame retailers. Retailers blame the big CPGs. And so it goes. Is the practice widespread? We don’t think so. As Target CEO Brian Cornell told CNBC recently, there’s just no room for price-gouging in an ultra-competitive industry where consumers can easily compare prices — and just as easily choose to shop elsewhere. That’s why some of the biggest players are touting recent price cuts.

Our friend Bob Anderson shares his thoughts on this topic on page 20, but we’d like to hear your take. Whether on or off the record, let us know what you think. Is price-gouging widespread? If so, who’s at fault? And what should be done? We’ll publish some of your responses in our next issue.