All those things can be true and people can still be greedy too. I bet when those things stop happening prices will not go down.
Part is corporate greed. But a lot of it is global markets and higher input costs. I’ll give just a couple examples.
Front month natural gas in the US is up about 200% y/y. Natural gas is an input in fertilizer manufacturing. Look at what that has done to fertilizer prices recently, up about 100% y/y, ~150% since 2020, in the US. And globally this is much worse since natural gas prices are higher than in the US, and there is no end in sight given the disruptions due to Ukraine being invaded. Fertilizer is a direct input into everything food and ag related…crops, animal feed, etc… This is a US fertilizer index from the US BLS:
And an LA Times article from a couple days ago I just found speaking to this: Russia's war in Ukraine worsens fertilizer shortage, risking world food supplies
Another example, grains. Prices globally have soared due to Ukraine. Ukraine is a huge producer and exporter, and obviously they are unable to send shipments even though they had a great crop last year and have tons in storage. This has a huge domino effect worldwide, not just on flour and bread, but on animal feed, which then raises animal prices (animals are a commodity that are traded on exchanges).
https://www.washingtonpost.com/world/2022/04/07/ukraine-wheat-crop-global-shortage/
And, let’s add to this the fact that the US winter wheat crop is the worst in 20 years:
Out of curiosity, I looked at the price of the flour, mozzarella, and tomatoes I used when I was in business. In 1 year, the prices of each of those items has gone up roughly 30-40%. From 3 years ago, the same case of CA tomatoes, and mozzarella produced in WI, is up 70-80%.
There is a lot more hurt coming
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Have you checked the price of shrimp or sea scallops lately, fresh halibut etc.? We’ve resorted to buying frozen and reconstituting to best possible. If done carefully, there’s a good outcome…
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Greed is a minor issue. Groceries are perishable and if you don’t sell your product you lose, so it’s not like you can refuse to lower your price and hold it to sell later. Or as they told me in business school the motto for this sector is “Sell it or smell it.”
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I wonder what the % of 'fresh" to not is.
The other issue with the grocery business is that the industry wide net profit as a percentage of sales is about 2 percent. Which means supermarkets make their money on volume, so regardless of whether their merchandise is fresh or dry, their priority is to sell everything as soon as possible.
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The new term I am hearing on the news is: Greedflation! While the public is getting screwed, corporate profits are rising bigtime. (That includes gas, too.) Go figure?
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This is not new. At all.
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Not new, but what to do about it? As history has shown, once prices begin to moderate, and they are in some cases, I doubt they will ever fully come back to where they were. That’s the way our economy works. Remember what a damn burger cost years ago? What does that same burger cost now? And some economists are saying: the corporate sector should be allowed to maximize profits…
I can only speak for myself, but rising prices have not had much impact on me (and not because I have a ton of money). I mostly shop at the Union Square Greenmarket and Trader Joe’s, and prices there are pretty much the same as the past several years. Restaurant prices are definitely higher, but I certainly don’t begrudge restaurants trying to recover from the past few years, and no one needs to eat out.
And complaining that
is silly. Have they ever? Since you were born? Minimum wage (and other compensation) also only goes in one direction: up. I don’t see a lot of whinging about that.
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We actually agree on much of this, small_h. However, much of the country is whining about this right now, throwing blame around, as if there was some magic bullet to correct the problem. Just frustrated and adding to the chorus…
First you write
And then
So are you looking for a solution or admitting there isn’t one?
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The good news is we saw regular gas prices drop to $4.19 at Costco this morning here in Westchester County, N.Y. The bad news, we steered away from small baskets of plums priced at $8 per (usually around $2.99) pound at our local farmers market last weekend. Not that farmers markets were ever a bargain…
Craved a Sundae so we stopped at a local Haagen Dazs ice cream shop. The price list was shocking: our Chocolate Fudge Sundae with mint chip ice cream, topped with whipped cream and Maraschino cherry which we shared came to $12. Better off buying a container at the market and bringing it home…
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One pound of Land O’ Lakes butter was priced at $8 plus change at a local market here. Wow, might have to find decent substitutes…