Alexandra Svokos
Vice President Kamala Harris said as president she would work to pass a federal ban on corporate price gouging on food and groceries in an attempt to lower the cost of living for families across the nation. This would be a first-of-its-kind federal law, though many states have laws addressing price gouging, and is clearly in response to Americans' frustration over their grocery bills, where inflation is felt most widely.
"My plan will include new penalties for opportunistic companies that exploit crises and break the rules," Harris said Friday at a campaign speech in Raleigh, North Carolina.
Harris said while prices went up during the pandemic due to supply chain failures, supply chains have since improved, but prices remain too high. And while households struggle to make ends meet due to elevated food prices, large food companies are seeing their highest profits in two decades and many aren't passing these savings on to the consumer.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
"Look, the bills add up. Food, rent, gas, back to school clothes, prescription medication. After all that, for many families, there's not much left at the end of the month," said Harris. "When I am elected president, I will make it a top priority to bring down costs and increase economic security for all Americans."
A ban on price gouging would prevent companies from unfairly exploiting consumers, and ideally, bring food prices down. But economists disagree on whether or not a federal price-gouging ban would work to lower food prices. While some blame corporate greed as a main driver of inflation, others believe that price gouging isn't actually a primary catalyst of inflation.
How much grocery prices have increased since the last election
Inflation has caused food prices to rise substantially over the last several years, and while prices are no longer increasing as much as they did over the last two years (rising just 1.1% over the last year), grocery costs remain a huge headache for many households. Nearly three-quarters of U.S. adults are stressed by everyday expenses, with groceries frustrating households the most, according to the latest USA Today Blueprint Credit Cards Survey.
Compared with four years ago, grocery prices are up about 20%, due to a mix of supply and demand pressures from the pandemic and other global events, reports the New York Times. And a study from GO Banking Rates found that from the last federal election on Nov. 3, 2020, to March 2024, food prices rose 25.8%, meaning $100 in groceries in 2020 would cost $125.80 today, for the same items.
Here’s a look at how much the average price of everyday food staples increased over that period as well:
- Eggs: 54%
- Milk: 36%
- Cheese and butter: 30%
- Cereals and bakery products: 28%
- Beef: 20%
- Chicken: 25%
- Fresh fruits and vegetables: 21%
The most recent Consumer Price Index (CPI) report showed that inflation continued to moderate, but key goods and services still had rising costs. In terms of which goods and services are driving inflation, food at home rose 0.1% in July, which is the same rate seen the previous month.
How do price-gouging bans work?
Over 30 states have laws around price gouging on the books, many of which apply to profiteering during wartime and states of emergency like natural disasters.
The way those laws work are generally by prohibiting raising prices by a certain percentage within a certain time period, as defined by the state. For example, in Maryland, during a state of emergency, you are not allowed to set a price for a good or service 15% or higher than the highest price of that good or service within four to 60 days before the state of emergency was declared. There are some exceptions, though, for example if you can prove that the price rise is consistent with seasonal prices based on historical data from the previous three years.
Many of Harris' critics have pointed to this policy proposal as a sign of price controls, which were instituted during inflation in the 1970s. While the policy wouldn't set prices, it would enable the Federal Trade Commission to investigate price swings, the Associated Press reported.
The specifics of Harris' idea of price gouging have not been defined. This lack of definition, as well as concerns about if this type of law would work in the way intended and if grocery prices actually need to be "saved" as inflation has cooled, have contributed to criticism of the proposal. The editorial board of the Washington Post, for example, referred to it as a "gimmick."
This is not the first time Harris has discussed tackling price gouging. In 2020, while serving as a senator, she and Sen. Elizabeth Warren, D-Mass., introduced a bill, the Price Gouging Prevention Act, banning price gouging during national emergencies, in response to the pandemic. Democratic senators continued to push for that legislation this year.
While politicians point to corporate greed causing grocery prices to rise, not everyone agrees with that assessment. Economists have pointed to rising prices as simply outcomes of changed supply and demand over the last four years. Even so, there are some cases of obvious changes to what consumers get for certain prices, like shrinkflation.
Related Content
-
How Your Social Security Check Changes at Ages 62, 65, 66, 67 and 70The longer you wait, the bigger your Social Security check. We break it down by the most common ages when people claim their benefits.
-
Lock or Float? How to Decide on Your Mortgage RateMortgage rates move daily, here’s how to know if you should lock in a rate now or let it float until closing.
-
Help! My Car Was Totaled. Should I Repair and Keep Driving It or Buy a New One?Does it ever make sense to keep a totaled car? Maybe, but you need to consider these factors first.
-
Are High-Yield Savings Accounts Still Outpacing Inflation?Some savings accounts give you the ability to outpace inflation, lessening its impact on your finances.
-
10 Ways to Stay Safe From Grandparent Scams and Other Fraud, Courtesy of a Financial PlannerScams are increasingly hard to detect, and anyone can be fooled, from older people to educated professionals. Here are 10 ways to avoid becoming a victim.
-
This Is How the Student Loan Bubble Is Primed to Pop, From a Student Funding ExpertFueled by easy money, inflated tuition and high default rates, the student loan bubble mirrors the 2008 subprime mortgage crisis. We could be headed for a potential financial collapse. What can we do?
-
Amazon Ends Free Shipping Benefit Sharing with Non-Household MembersStarting October 1, Prime members will no longer be able to share shipping perks with those outside their household.
-
Market Fees Could Be Costing You — Here’s How to Avoid ThemSome money market accounts charge more than they earn. Here's how to spot costly fees and choose smarter savings options.
-
More Than Money: The Hidden Toll of Financial Abuse of Older AdultsFinancial abuse from schemes involving tech support, government impostors, false sweepstakes, grandchild hoaxes and online shopping issues can cause thousands of dollars in losses.
-
I'm a Financial Planner: Here Are Three High-Impact Ways to Make a Difference With Your DollarsThe world often feels out of control, but here are three ways to use your money — through investments, charitable giving and political donations — to help create a more just and sustainable future.
