Is Grocery Store Price Gouging a Concern — and Was It Real in the First Place?

An almost universal complaint among American consumers coming from all walks of life: the price of groceries. Whether one is working class, middle class, upper class, or belonging to the jetsetting crowd, the price of eggs, milk, meat, bread, and other staples was hotly debated as COVID-19 began a steep climb in prices.

Supply chain issues were set against corporate greed in the popular narrative as two tales spun out differing stories of what had happened at the checkout, but the reality remained simple enough — groceries had surged in price. Who was to blame, and why?

Grocery Prices Skyrocketed, but Are Grocers Entirely To Blame?

Although food prices are stabilizing as the true aftermath of the COVID-19 pandemic continues to settle, the effects of past surges are still being felt. According to the latest U.S. Bureau of Labor Statistics data from December 2024, food-at-home prices have leveled off with a year-over-year inflation rate of 1.8%, while food-away-from-home prices are sitting at double that rate, 3.6%. However, the reality is that grocery prices surged over a very short period of time during the pandemic and have not relented since.

According to NPR, grocery prices soared by 25.6% between February 2020 and July 2024, outpacing even the breakneck pace of overall inflation during that period, which stood at a remarkable 21.6%.

Democrat Bob Casey, a former Pennsylvania United States senator only recently defeated in the Nov. 5 election by the narrowest of margins, spoke to the case of then-constituent Erin Wiggle via The Guardian. Casey’s September 2024 op-ed cast light upon the plight of many Americans embittered by the cost of essential goods.

“Erin is right. Under the cover of inflation, companies have raised the prices of everyday household items to rake in record profits at the expense of American families. As my investigation into what I’ve called ‘greedflation’ shows, from mid-2020 to mid-2022, corporate profits rose by 75% — five times as fast as inflation. In fact, corporate profits jumped so much that they played a major role in causing inflation — according to the Federal Reserve, corporate profits accounted for all the inflation from July 2020 through July 2021 and 41% of all inflation from July 2020 through July 2022,” Casey wrote.

Data Suggests Grocers May Simply Be Passing Macroeconomic Cost Burdens Along, Without Profiteering

Coming from the same NPR report mentioned above, however, is data suggesting that grocers may not be profiteering as deeply as consumers might believe. While grocery shoppers stand in shock over the ever-increasing costs of filling their carts, grocers may simply be following the market.

“Companies’ financial disclosures cover global operations, meaning lots of variety in costs and prices. But for almost all companies that NPR analyzed, between 2018 and 2023 the margins either declined or grew less than 1%,” NPR reported, including sector giants such as Walmart, Pepsi, Kroger, and Kraft Heinz.

This point was underscored by New York Federal Reserve researcher Thomas Klitgaard and former chief economist at the White House Council of Economic Advisers, Ernie Tedeschi.

“Even though profit margins for grocery stores have gone up,” Klitgaard wrote in a July 2024 report, “the increase appears to be only a small contributor to the rise in food prices relative to the increase in their operating costs.”

“Grocery was different” from the remainder of the broader retail sector, Tedeschi indicated. “Grocery didn’t pop as quickly in the depths of the pandemic, but it rose sort of like a slow burn and it stayed tenaciously higher.”

NC State University’s Poole Thought Leadership’s take fell into a similar vein. Indicating a near 1:1 translation of input prices (excluding labor and capital) versus output prices for food and beverage retailers, the think tank indicated that consumer sentiment on this score was perhaps misplaced.

“Note that, for the first half of 2024, there’s a near-perfect 1:1 relationship between the two series, indicating that output prices have risen at the same pace of input prices. This is entirely consistent with cost pass-through, not price gouging,” the scholars indicated.

“In other words, this data suggests that food and beverage stores are passing their own rising costs on to consumers — not raising prices excessively,” they added.

President Donald Trump Elected, at Least Somewhat, on the Back of Inflationary Concerns

It’s hard to deny the ultimate power of inflation in deciding political futures, however.

As CNN detailed, an impressive 96% of those polled cited “high prices for gas, groceries and other goods” as a motivator as to how they cast their ballots in the most recent presidential election. Trump would win a persuasive victory as a result of targeting post-COVID inflation as one of his key issues.

Whether the incoming administration can address the persistent, though calming, issue of price inflation regarding essential goods remains to be seen.