Your Groceries Cost More Despite Falling Inflation - Is Corporate America Milking Consumers?
By Jake Beardslee ·
July 26, 2024
As inflation peaked in mid-2022, many food companies raised their prices significantly. However, even as costs have since decreased, these elevated prices have largely remained in place, leading to substantial profit increases across the industry.
A Guardian analysis of 36 major U.S. food corporations reveals that most have seen their profits surge while continuing to charge customers higher prices. Since just before the pandemic, these companies' net profits have increased by a median of 51%, with some seeing gains of up to 950%. Hanson Lu / Unsplash
Restaurants, in particular, have benefited, with a median profit increase of 72% over the past two years. This stands in stark contrast to the average American worker, whose wages have only risen by 5% since inflation's peak. Kenny Eliason / Unsplash
Some executives have been candid about their pricing strategies. Kroger's CEO stated in June 2022 that "a little bit of inflation is always good for our business," while Hostess's CEO noted that rising prices across the economy "helps" their profitability. Phillip Pessar / Wikimedia
The case of chicken wings illustrates how companies have maintained high prices even as costs have fallen. While wholesale wing prices spiked in 2021, they subsequently dropped significantly. However, companies like WingStop have continued to increase menu prices, contributing to a 222% profit increase, according to The Guardian. 3HeadedMonster / Wikimedia
Many companies have also engaged in "shrinkflation," reducing product sizes without lowering prices. Mondelez International, for example, has decreased the size of products like Oreos and Ritz crackers while still implementing price increases totaling over 35% since 2021. Mike Mozart from Funny YouTube, USA / Wikimedia
Some economists argue that these pricing strategies amount to profiteering. Isabella Weber, an economist at the University of Massachusetts, describes the profits as "extraordinary" and notes that low-income individuals suffer the most from persistently high food prices, The Guardian reported. Jakub Żerdzicki / Unsplash
Looking ahead, while some restaurants have introduced new value meals, these often mask broader price increases across their menus. For instance, McDonald's prices are still up 40% overall since 2019, despite offering some lower-priced options. Dirk Tussing from Chicago IL, United States / Wikimedia
As the food industry continues to navigate the post-inflation landscape, it remains to be seen how long companies can maintain their current pricing strategies before facing pushback from consumers or increased competition. Oxana Melis / Unsplash
This situation has significant implications for both consumers and the broader economy, potentially influencing political outcomes in the upcoming November elections. Phil Hearing / Unsplash
