You aren’t imagining things: grocery prices have gone up a lot over the past few years. In fact, according to the USDA, food prices rose by 25% from 2019-2023.
The Federal Trade Commission is now investigating why prices are so high.
In their report, researchers state, “Some firms seem to have used rising costs as an opportunity to further hike prices to increase their profits, and profits remain elevated even as supply chain pressures have eased.”
ABC15 asked an Arizona State University supply chain expert about those claims.
Timothy Richards, the Morrison Chair of Agribusiness in the W. P. Carey School of Business at ASU, says while it’s possible, he doesn’t believe it’s likely. He says Kroger, for example, made a 1.4% net margin in the last year.
“If you took all of their profit and divided it by the revenue they generated from all their store that’s only 1.4% as opposed to tech companies that make over 50%,” he said. “So net margin is the best indicator for profitability in any company across any industry.”
Richards says higher wages cause prices to go up, which means the cost of paying the manufacturers, supplies, and other employees has likely contributed to the spike.
If the FTC finds that grocery chains are purposely inflating prices, Richards says they can’t directly force prices back down. They can, however, stop future grocery mergers from happening.
As ABC15 has reported, the merger between Kroger and Albertsons was recently put on pause as the FTC investigates. Another hearing on that is scheduled for later this month.
