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Government 'Strike Force' Makes Play for Large Grocers

Chair of FTC announces pricing probe
Lynn Petrak, Progressive Grocer
Grocery prices
Several arms of the federal government will be looking at pricing and profits of large U.S. grocers.

As early August indicators, including a worse-than-expected jobs report and a downturn in global financial markets, reflect continual economic uncertainty, regulators in the United States are taking aim at the grocery sector. On Aug. 1, the chair of the Federal Trade Commission (FTC) announced that the agency is looking into grocery costs and retailers’ performances in the recent history marked by elevated inflation. 

“I’ll be asking [the] commission to join me in launching an inquiry into grocery prices to shed light on why it is that prices and profits remain so high, even as costs appear to come down,” said Lina Khan, during the first meeting of the Strike Force on Unfair and Illegal Pricing. That Strike Force was formed in March, as President Joe Biden announced efforts to stop what it called “illegal corporate behavior” that results in higher prices for consumers.

[RELATED: White House Digs Into Grocery Inflation]

Khan, along with leaders from other agencies including the Department of Justice, U.S. Department of Agriculture, U.S. Department of Health and Human Services and Attorney General’s office, among others, said that the group will explore the tactics of what it called big grocery chains. The multi-agency initiative will also investigate pricing deeper in the supply chain, back to farmers and producers.

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The chair of the Strike Force said that the move to probe large grocery businesses is essentially driven by consumer feedback. “While talking with people across the country about the biggest economic challenges they face, one of the top concerns I consistently hear about is high grocery prices. Every week, people stock up on the food they need to feed their families. And too often, people feel like too much of their paycheck is going towards covering these basics — be it meat or bread or eggs,” Khan declared.

While acknowledging that inflation has eased – and crediting the Biden Administration for the stabilization – Khan maintained that shoppers are not getting competitive pricing. “Grocery prices skyrocketed during the pandemic, due in large part to higher costs and supply chain disruptions. We also know that, in the years since, costs have fallen and supply chains have improved. But many items are still too costly, and many large grocery chains are still raking in enormous profits,” she remarked.

Another government agency, the U.S. Bureau for Labor Statistics, reported in July that inflation for food at home ticked up a scant 0.1% in June but the year-over-year rate is below the away-from-home index. Following that report, Andy Harig, VP, tax, trade, sustainability and policy development at FMI - The Food Industry Association, said that eating at home remains the most cost-effective strategy for consumers as they manage their food spending. “The path to bringing down inflation continues to be somewhat uneven, as certain grocery categories witnessed moderate increases last month. Other staples like fruits and vegetables as well as cereals and bakery products declined in June. But food-at-home continues to run well below the overall and ‘core’ inflation rates,” he pointed out, adding, “Despite ongoing increases in operational costs to food retailers and suppliers, the food industry remains committed to making investments in their businesses and the supply chain to provide value to customers.”

As of press time, representatives of the nation's largest grocery chains have not responded to the latest announcement of pricing investigations. 

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