Why Food Prices Could Skyrocket
As you can see in the video above what was once one of the saving graces of the supermarket industry – real competition – is a disappearing state. Grocery store competition is now down to 3, maybe 4 competitors in a given area.
I grew up in an Iowa where in one city we had at the same time stores such as Eagle Foods, Benner Tea, The Great A&P Tea Company, The Big Bee, Randall’s Super Value, Hy Vee plus a myriad of neighborhood corner groceries. Competition was fierce.
Now in any Iowa city, depending on the size of the town, you may have a Hy Vee, possibly a Walmart with a grocery, and possibly a Fareway. In Iowa’s few larger cities there may also be a Target with groceries, the rare in Iowa Costco and possibly an Aldi’s. That is about it for grocery stores in Iowa these days. Not a lot of competition. Mostly it is Hy Vee and Walmart.
In the video where it talks about Kroger’s and Albertson’s and all the various brands they have acquired over the years you can see the competition has been pretty well subsumed. Thus when you see that the price of your favorite beans have gone up at one store you can guess that there is no competition to stop either the rise or the amount of the rise.
So as we all will do so, remember when you complain that the price of groceries is high there are a myriad of factors that is going in to those rising prices. Farmers aren’t getting much more, but the retailer is simply because they can. As noted by Representative Katie Porter, recent price rises have included a whopping dollop of excess profit for the corporation:
Equipped with one of her easy-to-read, data-filled posters, Porter got Konczal to admit that surging corporate profits are forcing American consumers to pay significantly more for goods and services.
“According to this chart, what is the biggest driver of inflation during the pandemic? The blue – the dark blue is the recent period,” Porter pointed out.
“It would be corporate profits,” Konczal confirmed.
“And what is that percentage?” Porter asked.
“It is 54 percent,” Konczal replied, “and that number does stay that level of high if you update that number to more recent numbers as well.”
Also note that it is NOT workers wages that is driving inflation, but again, corporate profits that are driving inflation. Plus suppliers to grocery stores and other retail outlets are adding their extra corporate profits onto their product thus multiplying the effect of inflation.
Good piece, Dave. Ed