Current:Home > MyDid grocery chains take advantage of COVID shortages to raise prices? FTC says yes -Edge Finance Strategies
Did grocery chains take advantage of COVID shortages to raise prices? FTC says yes
View
Date:2025-04-17 00:04:21
Large grocery store chains exploited product shortages during the pandemic by raising prices significantly more than needed to cover their added costs and they continue to reap excessive profits, according to a Federal Trade Commission report.
The grocery giants also used their marketing power and leverage to widen their advantage over smaller competitors, according to the report, titled “Feeding America in a Time of Crisis.”
“As the pandemic illustrated, a major shock to the supply chain have cascading effects on consumers, including the prices they pay for groceries,” FTC Chair Lina Kahn said in a statement. “The FTC report examining US grocery supply chains finds that dominant firms used this moment to come out ahead at the expense of their competitors and the communities they serve.”
How much have grocery prices risen?
In 2021, food and beverage retailer revenue increased to more than 6% above their total costs, compared with a peak of 5.6% in 2015, the FTC report says. And during the first three quarters of 2023, profits increased further, with sales topping costs by 7%.
Protect your assets: Best high-yield savings accounts of 2023
“This casts doubt on assertions that rising prices at the grocery store are simply moving in lockstep with retailers' own rising cost,” the report said. The elevated profits, it added, “warrant further inquiry" by the FTC and policymakers.
The Food Marketing Institute, which represents large food retailers and wholesalers, would not comment on the report, saying it needs more time to review the findings.
The National Grocers Association, which represents smaller, independent food retailers, praised the study.
“This study confirms what independent grocers and their customers experience firsthand: dominant national chains or so-called 'power buyers' are abusing their immense economic power to the detriment of competition and American consumers," NGA CEO Greg Ferrara said in a statement..
The report stems largely from orders the FTC issued in 2021 for nine large firms - including Walmart, Kroger, Procter & Gamble and Tyson Foods - to provide detailed information about their business practices. But the profit margin data came from publicly available grocery retail patterns and it’s not clear to what extent it applies to those companies, the report said.
Separately, the FTC is challenging Kroger's proposed acquisition of Albertsons, saying the merger would decrease grocery store competition and hike prices for consumers.
How did COVID affect food prices?
During the COVID-19 pandemic, products such as toilet paper, meat, milk and hand sanitizer were often in short supply and prices soared. Grocery companies blamed supply-chain bottlenecks in the U.S. and overseas resulting from sharp demand spikes during lockdowns as well as COVID-related worker absences at factories, warehouses and ports. Inflation more broadly hit a 40-year high of 9.1% in mid-2022 but has recently slowed to about 3% as product and labor supply shortages have eased.
The FTC report suggests the grocery companies were also price-gouging consumers.
The study also found that big food retailers:
∎ Imposed strict delivery requirements and threatened fines if they didn’t comply. That widened their advantage over smaller rivals and “may create an opportunity for some firms to entrench their power,” the report said.
∎ Explored whether to build their own manufacturing capacity or buy producers. By consolidating already concentrated markets, such mergers could harm smaller competitors, the study said.
veryGood! (19)
Related
- Juan Soto to be introduced by Mets at Citi Field after striking record $765 million, 15
- Bruce Springsteen Postpones All 2023 Tour Dates Amid Health Battle
- 3 dead after car being pursued by police crashes in Indianapolis minutes after police end pursuit
- Find Out When Your Favorite Late Night TV Shows Are Returning Post-Writers Strike
- Elon Musk's skyrocketing net worth: He's the first person with over $400 billion
- Nebraska latest Republican state to expand Medicaid to cover postpartum care for low-income mothers
- British Museum seeks public help in finding stolen artifacts
- Find Out When Your Favorite Late Night TV Shows Are Returning Post-Writers Strike
- Federal hiring is about to get the Trump treatment
- Save $210 on the Perricone MD Skincare Product Reviewers Call Liquid Gold
Ranking
- Could Bill Belichick, Robert Kraft reunite? Maybe in Pro Football Hall of Fame's 2026 class
- Rhode Island community bank to pay $9M to resolve discriminatory lending allegations
- Step Up Your Coastal Cowgirl Style With Coach Outlet's Riveting Studded Accessories
- Massachusetts man stabs five officers after crashing into home following chase, police say
- What do we know about the mysterious drones reported flying over New Jersey?
- Bruce Springsteen Postpones All 2023 Tour Dates Amid Health Battle
- Taylor Swift attends Kansas City Chiefs game, boosting sales of Travis Kelce jerseys 400%
- New Jersey Supreme Court to rule on pandemic-related insurance exclusions
Recommendation
Toyota to invest $922 million to build a new paint facility at its Kentucky complex
Germany bans far-right group that tried to indoctrinate children with Nazi ideology
Chelsea Handler Debuts New Boyfriend Over a Year After Jo Koy Breakup
Iran says it has successfully launched an imaging satellite into orbit amid tensions with the West
Krispy Kreme offers a free dozen Grinch green doughnuts: When to get the deal
Bahrain says a third soldier has died after an attack this week by Yemeni rebels on the Saudi border
EPA Rolls Out Training Grants For Environmental Justice Communities
Flight attendant found dead with sock lodged in her mouth in airport hotel room