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Dive Briefing:
- Vice President Kamala Harris Promised a federal ban on food price increases. She made the following economic policy proposals in a Friday speech for her presidential campaign:
- Harris said her “first-of-its-kind” federal ban would include “new penalties for opportunistic companies that exploit the crisis and flout the rules.” She did not provide further details.
- FMI – The Food Industry Association has condemned the price hike claims, and the National Grocers Association has called for stronger enforcement of the Robinson-Patman Act, an antitrust law that prohibits price discrimination in commerce.
Dive Insight:
Harris said banning food price increases would help make the food industry more competitive, adding that if elected president, her administration would support small food businesses that “play by the rules and get ahead.”
“We all know that prices went up during the pandemic when supply chains were shut down and failed, but our supply chains have improved now and prices are still too high. … Many of the big grocery companies are reporting their highest profits in 20 years, and while many grocery chains are passing on those savings, others are still not,” Harris said.
In July Home-cooked meal prices rose 1.1 percent year-on-year. According to consumer price index data released Wednesday by the U.S. Bureau of Labor Statistics, inflation rose 2.9%, the lowest annual rate since March 2021. Food inflation has slowed in recent months, but Consumers continue to be concerned about food costs..
Harris cited her previous experience as California attorney general in prosecuting businesses for illegal price hikes. “So trust me, as president, I will go after bad actors,” she said. Banning food price hikes is one of several economic policies Harris suggests, including increasing new home construction, expanding the child tax credit and lowering drug costs.
NGA leads crusade against group's claims “Unfair and discriminatory tactics” by large food retailers and suppliers It hurts independent grocers. Criticized Harris's proposal.
“The proposal to ban food price increases is a solution in search of a problem,” NGA President and CEO Greg Ferrara said in a statement.
Instead of proposing new legislation, the NGA said the government should more strictly enforce the Robinson-Patman Act, lower swipe fees, and “curb excessive and burdensome regulation.”
There were numerous news reports last week that Harris would propose a ban on raising food prices on Friday, but FMI released a statement on Thursday. He says there are misconceptions about food price inflation and industry practices.
“It is inaccurate and irresponsible to confuse illegal activity such as price hikes (a defined legal term that occurs when certain trade practices are violated) with inflation,” FMI President and CEO Leslie G. Sarasin said in a statement. “Inflation is a broad, macroeconomic measure that measures the increase in consumer prices over time.”
FMI said profit margins for food retailers were low, at 1.6% last year, as the industry struggled to keep prices “as low as possible” despite rising labor costs, volatile energy prices, more severe weather, increased regulation and supply chain issues.
Earlier this year, the Federal Trade Commission released a report stating: Food and beverage retailers' revenues are outpacing costs. In recent years, it has been suggested that the grocery industry has been using inflation to increase profits at the expense of consumers. The FTC also said that large grocery retailers have taken steps to protect their market power as they faced supply chain disruptions during the COVID-19 pandemic, putting smaller retailers at a competitive disadvantage.
The report utilized publicly available data and responses the agency ordered from nine grocery companies, including Kroger, Walmart, Amazon, and C&S Wholesale Grocers, in late 2021.
According to a White House analysis released earlier this year: Grocery stores maintained higher profit margins. They've seen this during the pandemic, when margins for other types of retailers, like clothing stores, have plummeted.
