FTC head wants investigation into grocery stores over inflated prices

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The head of the Federal Trade Commission wants to investigate whether grocery stores could do more to lower prices for Americans, as many shoppers continue to be shocked over their food bills.

This month, FTC Lina Khan announced she would seek the investigation, during the first meeting of the Biden administration’s multi-agency Strike Force on Unfair and Illegal Pricing.

Khan said that while the pandemic temporarily jacked up labor costs and caused supply chain disruptions, those constraints have eased, but “many items are still too costly, and many large grocery chains are still raking in enormous profits.”

“We want to make sure that major businesses are not exploiting their power to inflate prices for American families at the grocery store,” she said.

Grocery store inflation has slowed considerably since the peak of the pandemic, according to a consumer inflation report in July, showing prices rose just a little over 1 percent in the previous 12 months. That’s down from a 5 percent jump during the previous year, and a double-digit hike the 12 months before that.

Still, many are still feeling the pain at the checkout line, as some report “shrinkflation,” paying the same prices for smaller portions of goods.

“You can’t afford it,” Tennessee resident Susan Ackert told local news station WKRN this week. “You either pay your bills or you eat.”

That’s led politicians to turn up the heat on grocery companies.

Democratic nominee and Vice President Kamala Harris has campaigned on promises to stop “price gouging,” while Republican nominee Donald Trump has vowed to end the Joe Biden “inflation nightmare.”

Senators Bob Casey and Elizabeth Warren, meanwhile, sent a letter to Kroger this week inquiring about the store’s plan to roll out electronic shelf labels, questioning whether they would be use to jack up prices for in-demand items.

“Grocery prices have been running much higher than average inflation, and grocery profit margins have been quite high as well,” Lindsay Owens, executive director of the Washington think tank Groundwork Collaborative, recently told Marketplace. “And while the input costs come down, grocery prices are still high, and that’s been a problem for many families who are trying to keep food on the table.”

The FTC will hold full commission vote on whether to move forward with the investigation at a future date.

If an investigation is approved, federal regulators will scrutinize if mergers have made certain chains too influential, whether companies are colluding to fix prices and other potential avenues of anti-competitive behavior.

“Grocery prices have been running much higher than average inflation, and grocery profit margins have been quite high as well,” Lindsay Owens, executive director of the Washington thinktank Groundwork Collaborative, recently told Marketplace. “And while the input costs come down, grocery prices are still high, and that’s been a problem for many families who are trying to keep food on the table.”