Inflation has pushed food prices to the point that many families are spending a larger portion of their income at the supermarket, and in an election year, it threatens to become a political issue.
Republican Presidential Candidate Donald Trump, in at least one campaign appearance, blamed Biden administration policies for the run-up in food costs. Vice President Kamala Harris, set to accept the Democratic presidential nomination this week, has lashed out at the food industry, calling for a ban on food price-gouging.
Now, food industry executives are weighing in. National Grocers Association CEO Greg Ferrara called Harris’ proposal “a solution in search of a problem.”
‘Extremely thin margins’
“Our independent grocers, already operating on extremely thin margins, are hurting from the same inflationary pressure points as their customers,” Ferrara said. “Labor, rent, swipe fees, utilities; you name it, the price has increased.”
But Ferrara does his share of finger-pointing, saying there is a lack of fair competition with big box grocery retailers.
For grocers and consumers alike, the problem is that food prices haven’t come down that much. Industry executives says wages for workers have gone up and they are spending more money on supply chains. Those costs, they say, are permanent.
On his latest earnings call, Walmart CEO Doug McMillon said negotiations with suppliers have resulted in some lower prices in the food aisles. But he said prices should go down even more.
‘We think prices need to come down’
“We have less upward pressure, but there are some that are still talking about cost increases, and we’re fighting back on that aggressively because we think prices need to come down,” McMillon said.
The Walmart CEO said there is one sector of the grocery store where prices have remained “stubbornly high.” Prices of dry groceries and processed food items have not gone down and some prices are still rising.
The government’s July Consumer Price Index (CPI) shows the index for “food consumed at home,” which covers groceries, rose 0.1% in July and is up 1.1% over the last 12 months. If the government wants to do something about food prices, Ferrara has a suggestion.
“Lower skyrocketing swipe fees, rein in excessive and burdensome regulations, and enforce antitrust laws like the Robinson-Patman Act that enhance price competition amongst retailers, regardless of size or location,” he said.