Sick of high grocery bills? FTC chair proposes solutions in New Haven

Federal Trade Commission chair Lina Khan blamed food costs on price gouging. But grocers say they're being unfairly targeted.

John Craven

Sep 16, 2024, 8:45 PM

Updated 20 days ago

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Sick of high grocery bills? So are most people. The cost of food is a major issue in this year’s election.
The chair of the Federal Trade Commission blames price gouging. On Monday, she visited New Haven to push for more transparency in how grocers, and their food suppliers, set prices.
“CHECK-TO-CHECK”
Frank Redente raised two kids on his own. He says feeding them wasn’t cheap.
“It’s always been check-to-check, you know, being a single dad,” he said.
Now, as a New Haven city alderman, Redente sees other families suffering.
“Trying to put that money together at the end of the month to make sure you have your priorities is always tough,” he said.
After years of steep increases, food costs are finally leveling-off. In August, they only rose 0.1%, according to the U.S. Bureau of Labor Statistics. But since 2019, prices have jumped 28%.
NEW FEDERAL, STATE PROBES
On Monday, FTC chair Lina Khan met with CitySeed, a nonprofit that increases access to local food in New Haven.
Khan said the government must be more aggressive about reigning in prices. She recently launched a probe into the sophisticated algorithms that grocery chains use to set prices.
“The FTC recently launched an inquiry into this issue of 'surveillance pricing.' This is when companies are able to charge each person a different price based on what they know about you,” she said. “A company may be able to charge your family, where a kid has a peanut allergy, a higher price for the granola bars without peanuts.”
A recent FTC report found that national chains’ profits keep rising – despite inflation. In 2015, they earned 5.6% above costs. By last year, that figure jumped to 7%.
That led Connecticut Attorney General William Tong to launch his own inquiry in April.
“It's taking advantage of people,” Tong told reporters. “It’s charging an excessively high, or unconscionably high, price.”
WHO’S TO BLAME?
Initially, a pandemic-era supply chain crisis was responsible for high grocery bills. But now, Rep. Rosa DeLauro (D-New Haven) thinks food suppliers are driving price spikes.
“People like Tyson’s, Cargill, ConAgra, who are making profits hand over fist,” she said. “Doubling and tripling their profits.”
Grocers are pointing the finger at suppliers, too.
“All of these businesses have different business models,” Connecticut Food Association president Wayne Pesce said in April. “They have different cost structures. They have different supply chains.”
Pesce noted that only two retailers examined by the FTC even operate in Connecticut – Amazon/Whole Foods and Walmart – and they are national chains that own much of their supply and distribution network.
“The food community is a very large ecosystem,” he said. “You want to single out grocery stores? Well, let’s talk about food trucks and restaurants and commissaries who have had to raise prices because their costs went up.”
Tong has said he would like to investigate the rest of the supply chain but that his hands are tied.
“Our price gouging statute still limits us to the immediate retailer,” he said in April. “We don’t have the ability to go up the chain to producers, manufacturers.”
POLITICAL ISSUE
The cost of groceries has become a key issue in the race for the White House. Republicans blame the Biden administration for causing inflation, by pouring stimulus payments into the economy – including the $1.9 trillion American Rescue Plan – when the supply chain couldn’t keep up.
“People can't go out and buy cereal or bacon or eggs or anything else,” Donald Trump said during the Sept. 10 presidential debate. “The people of our country are absolutely dying with what they've done. They've destroyed the economy.”
Meantime, Kamala Harris has proposed a federal ban on “corporate price gouging” by food producers and grocers.
“My plan will include new penalties for opportunistic companies that exploit crises and break the rules,” Harris said at a campaign rally in North Carolina.
Some economists have warned that Harris’ plan amounts of price controls. But Khan said the FTC probe is about transparency – not government interference.
“Nobody’s talking about price controls,” she said. “We have a capitalist economy in this country. We’re talking about making sure companies are not colluding. We’re making sure that we don’t have illegal cartels that are dictating pricing.”