August 23, 2024

Media contact: National Consumers League – Melody Merin, melodym@nclnet.org, 202-207-2831

WASHINGTON, DC – The National Consumers League (NCL), with a 125-year history of advocating for transparency and fairness in the food marketplace, praises Vice President Kamala Harris’s focus on price gouging within the grocery industry. While critics have argued that banning price gouging is a campaign ploy and economic gibberish, NCL has long witnessed the numerous ways corporations can deceive and overcharge consumers. Harris’s plan tackles the abuses within the grocery industry head-on.

For too long, American consumers have been exploited by deceptive corporate practices that erode purchasing power and trust. Without guidelines and accountability, these practices will continue unchecked. Harris’s call to action is a shot across the bow, a powerful reminder to corporations that the Biden-Harris (and potentially a Harris-Walz) Administration is committed to addressing kitchen-table issues, like rising grocery costs.

This is not a new issue, nor is it the only issue leading to higher consumer prices at the supermarket check-out line. Price gouging, particularly during emergencies or disasters, is already regulated in thirty-seven states, with enforcement entrusted to state attorneys general. Harris’s plan would expand these protections, putting the Federal Trade Commission in charge of preventing unfair pricing tactics.

In February 2024, U.S. Representative Jan Schakowsky and U.S. Senator Elizabeth Warren reintroduced the Price Gouging Prevention Act of 2024 to combat corporate price gouging citing American families’ financial struggles amid rising grocery costs and corporate profits.  Expanding the FTC’s authority, as outlined in the Price Gouging Prevention Act, would not be considered price fixing. Rather, the proposed legislation empowers regulatory agencies to enforce fair pricing practices, protect consumers from unjustified price hikes, and promote a competitive and transparent market without interfering with lawful price setting by businesses.

Equally egregious to price gouging is the practice of shrinkflation, where companies reduce product sizes or contents while maintaining or increasing prices. The Shrinkflation Prevention Act, introduced by Senator Bob Casey and supported by the NCL, is a crucial measure to protect consumers from this form of corporate exploitation. Surveys confirm that 73% of consumers are concerned about shrinkflation, and 79% feel cheated.

Another betrayal of consumers is the lack of, or hidden, unit pricing. Unit pricing is a cornerstone of consumer purchasing, providing the cost per pound, quart, liter, or another unit of weight or volume. Unit pricing is a vital tool for budget-conscious consumers. Currently, only nineteen states and the District of Columbia have enacted unit pricing laws or regulations, according to the National Institute of Standards and Technology, leaving consumers in other states without the essential information needed to make informed purchasing decisions.

A lack of competition within the grocery industry also negatively impacts consumers. The recent FTC action to block Kroger Company’s $24.6 billion acquisition of Albertsons Companies, Inc. illustrates the negative impact of reduced competition.  The merger of these two grocery giants, who together own 5,000 stores across forty-eight states, would reduce competition, drive up prices, lower food quality, and degrade customer service. NCL believes that competition benefits consumers, ensuring they receive quality products at fair prices.

Corporate greed almost certainly plays a role in rising grocery prices. One analysis found that over half of the increase (53.9%) in prices in the nonfinancial corporate sector (i.e., companies that produce goods and services) during the height of the COVID pandemic – could be attributed to bigger profit margins. Since the pandemic, mark-ups have remained “extremely elevated relative to historic norms.” Other analyses have found similar results, with corporate profits driving 53% of inflation.

Weekly grocery bills are higher than before COVID-19, and while many factors contribute to this—including supply chain disruptions, pandemic recovery, and interest rates—the bottom line is that consumers are paying more and getting less. The U.S. Department of Agriculture reports that Americans now spend about 11% of their income on food, the highest level in 30 years. Although food prices are expected to rise by 1% this year, consumers are still reeling from last year’s 5% increase.

More work needs to be done at the federal level to understand why inflation rates and the rise in food prices are out of sync. However, one thing is clear: empowering the FTC and state attorneys general to hold companies accountable is a step in the right direction.

The notion that the market will self-correct is not just naive—it is dangerous. Without strong regulatory action, companies will continue to prioritize profits over people, especially in essential sectors like groceries, where families cannot afford price hikes or size reductions. NCL lauds Vice President Harris for taking a stand against corporate greed.

It’s time to put an end to these deceptive practices and ensure that every American has access to affordable, transparent, and fair food pricing. Vice President Harris’s plan is a bold and necessary step toward achieving that goal.

###

 About the National Consumers League (NCL) 

The National Consumers League, founded in 1899, is America’s pioneer consumer organization. Our mission is to protect and promote social and economic justice for consumers and workers in the United States and abroad. For more information, visit www.nclnet.org.