Here’s Why Grocery Prices Are So High According to National Grocers Association

Consumers have faced high grocery prices since the COVID-19 pandemic, which led to shortages of everyday items such as meat, toilet paper, paper towels, and diapers. Since then, it appears that grocery prices have never returned to pre-pandemic levels. The National Grocers Association’s president and CEO has explained why prices remain so high today.

Greg Ferrara, the head of the National Grocers Association, spoke to FOX Business about the reasons behind the uptick that continues to squeeze consumers’ wallets. He explained that each grocer’s net profit margins are tightened by higher labor costs and overall inflation costs of the products they are stocking in their stores.

“Our members are not publicly traded companies, but in 2023, our members realized a net profit margin of 1.4%, so they are making very little margin at a time when they’re dealing with inflationary pressures or dealing with increased labor costs,” Ferrara told FOX Business.

“We’ve seen significant wage increases since before the pandemic, but we’ve also seen enormous increases in commodity prices, and while those have come down a bit, they are absolutely elevated,” Ferrara added. “I think rhetoric matters, and I think all elected officials and all politicians really need to be conscious of what they are saying because what we’re, unfortunately, seeing at some grocery stores is we have people from the public that are calling in screaming and using vulgar language with employees, accusing them of gouging, accusing them of stealing from them, which of course is not what is happening.”

So, how are consumers fighting back? Many are buying store brands of big-name products. Others are using store apps to clip digital coupons, stacking deals, and heading to larger chain stores, where they may have a bigger selection of items to choose from at significantly lower prices.

Some of these stores, such as Walmart and Target, have responded by lowering prices on everyday items, giving customers some breathing room within their grocery budgets. In the past several months, Target and Walmart have both announced initiatives to lower prices.

Walmart said it rolled back prices on nearly 7,000 items in its stores. “Our combination of everyday low prices plus a large number of rollbacks is resonating,” Walmart CEO Doug McMillon said during the company’s Q1 2024 earnings call, according to CNN.

Target announced it would lower prices on around 5,000 frequently shopped items across its stores. “We know consumers are feeling pressured to make the most of their budget, and Target is here to help them save more,” Target Executive Vice President and Chief Food, Essentials, and Beauty Officer Rick Gomez said. “Our teams work hard to deliver great value every day, and these new lower prices across thousands of items will add up to additional big savings for the millions of consumers that shop Target each week for their everyday needs.”