Americans are wildly frustrated by the current cost of living across the country, and specifically, the ever-increasing cost of groceries.
While many blame inflation or even corporate greed, the CEO of the popular grocery chain Kroger has explained credit card costs, fuel prices, and even the Federal Trade Commission are the true culprits for the high price tags.
The Cost of Groceries in the US Is Outrageous
According to one report, the cost of food in the United States has increased by 25.8% from November 2020 to March 2024. In other words, the exact same items that cost Americans $100 in 2020 now cost them a whopping $125.80.
Meanwhile, American wages have only increased by a mere 4.7% during that same four-year period. In response to this troubling reality, 80% of Americans now have to cut their grocery lists to save money.
Why Are Groceries so Expensive?
Grocery prices have undoubtedly risen over the past few years because of the ever-increasing inflation. However, even though inflation is subsiding, prices are still debilitatingly high.
Many Americans, as well as the nation’s leaders, agree that corporate greed is absolutely the reason prices have gotten to where they are today. As Senator Elizabeth Warren explained, “Grocery prices are up because of good old-fashioned corporate price gouging.”
Kroger CEO Defends Company Pricing
However, many grocery chains, like Kroger, have argued that this statement is simply untrue. The CEO, Rodney McMullen, claims that his company’s high prices have nothing to do with corporate greed.
McMullen was forced to make a statement in court earlier this week while fighting a lawsuit from the Federal Trade Commission (FTC), and he specifically named the three reasons why Kroger’s prices are so high.
Supplier Costs Increase
First, McMullen noted that he had to increase prices at Kroger because supplier costs are much higher than they once were.
In part, supplies have surged their prices in correlation with the growing inflation; however, they have also had to increase prices due to the jump in fuel costs. The vast majority of American food is shipped from extensive distances, which means every gallon of gas adds to their cost.
Credit Card Swipe Costs Have Skyrocketed
The Kroger CEO also mentioned that the company is paying more in credit card swipe costs than it did just a few years ago. According to the Motley Fool, most merchants pay between 1.15% and 3.15% for each credit card swipe.
In 2019, the average processing fee was a mere 1.5%, but it’s not just the percentage that’s taking a toll. More Americans are using credit cards for their purchases, so merchants like Kroger, which don’t charge a swipe fee on each purchase, pay more to the credit card company every month.
Kroger’s Prices Would Be Lower Ii They Were Allowed to Merge
While these reasons are important and certainly valid, McMullen explained that his store’s prices could be at least slightly lower if the FTC hadn’t blocked its multi-billion dollar merger proposal.
Kroger announced in 2022 that it planned to merge with fellow grocery chain Albertsons, buying the successful brand for nearly $25 billion. However, the FTC filed a lawsuit against the merger, claiming that what would be the largest grocery store merger in history should be denied.
Why Is the Kroger Albertsons Merger Bad for America?
Throughout the lengthy trial, at which McMullen spoke last week, the FTC has argued that Kroger’s acquisition of Albertsons is anticompetitive and will result in higher grocery prices for millions of Americans.
However, McMullen claims that the merger would actually allow the company to lower its prices, as it will now have the same reach and mass market as companies like Amazon, Walmart, and Costco do now.
Kroger’s Integrity Was Questioned
While it may seem that McMullen made several fair points at the trial, this topic was initially introduced because a company email was leaked, which raises questions about the integrity of the grocery chain.
In the email in question, Kroger’s senior director for pricing, Andy Groff, wrote, “On milk and eggs, retail inflation has been significantly higher than cost inflation.” This effectively admits to price gouging, though Kroger maintains that the selection of the email is misleading.
Americans Just Want to Be Able to Afford Their Groceries
As the FTC v. Kroger case continues, millions of Americans are still struggling to afford their groceries. The truth is that most people don’t care whether it’s credit card costs, supplier and fuel prices, or even the FTC’s fault; they just want lower prices.
With the presidential election right around the corner, both candidates have addressed the outrageous cost of groceries, each claiming they have the solution to the problem.
Kamala Harris Has Promised to Put a Stop to Price Gouging
If elected in November, candidate and Vice President Kamala Harris has promised Americans the first-ever federal ban on price gouging.
However, while millions of Americans are thrilled by this proposal, most business executives and economists argue that Harris’ plan is an example of risky and possibly unconstitutional government overreach.
What Does Donald Trump Say About Grocery Prices?
On the other hand, former president and Republican candidate Donald Trump has his own promise to the American people. He said, “So when I win, I will immediately bring prices down, starting on day one… We’re going to drill baby drill. That’s going to bring down prices of everything because energy brought it up.”
Some say Trump’s promise will not actually decrease grocery costs. However, the hope is that no matter who wins in a few months, the new president will find a way to make groceries affordable again.
