JACKSONVILLE, Fla. – A new report from the Federal Trade Commission suggests grocery giants used inflation and supply chain disruptions during the pandemic to drive their profits and keep raising prices.
Now, the agency is urging Congress to take a closer look into grocery profits.
The data shows food prices in the United States spiked 11% between 2021 and 2022, the largest annual increase in over 40 years.
News4JAX asked local consumers about their current spending Friday.
“Everything. Everything. Everything that I can think of that I need, you know, it’s expensive,” a consumer said.
The prices at the grocery store are high.
“I find fruits and vegetables and the things we need the most are the most expensive,” a consumer said.
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The report from the FTC revealed prices might even be higher than they should be with grocery store chains like Walmart exploiting COVID-19 product shortages to raise their prices.
“It’s all about big business. The little people don’t count,” a resident said.
The report reads: “Some firms seem to have used rising costs as an opportunity to further hike prices to increase their profits, and profits remain elevated even as supply chain pressures have eased.”
News4JAX asked Jacksonville University Economic Professor Dr. Tucker Omberg for his thoughts.
“When you have both falling supply and rising demand that is a textbook recipe for rising prices,” Omberg said.
Grocery store chains like Walmart, Kroger, and Amazon made billions of dollars in profits during the height of the pandemic and continue to do so.
“So costs are starting to come down so demand is also starting to fall,” Omberg said. “What we say when we say that inflation is slowing is not that the price is actually going down. It’s that the rate at which is growing is starting to level off. So, there’s a lot of water in the bathtub, but we’ve turned off the spigot so it’s not rising anymore.”
The FTC found revenues for grocery retailers were 6% over total costs in 2021, and 7% in the first nine months of 2023.
Dr. Omberg suggested that it’s perfectly possible grocery giants saw an increase in profits just because the demand was higher during the pandemic with more people spending time at home.
“I would say that grocery store chains have always been greedy. I don’t think the pandemic caused them to be any more greedy than they already were,” Omberg said.
There’s a study that suggests a lot of the price increases we’ve seen at the grocery store since 2019 can be attributed back to “shrinkflation.”