29 votes

US grocery stores should cut prices as costs ease, Joe Biden White House says

39 comments

  1. [3]
    Requirement
    Link
    They could. They won't but they certainly could. Price stickiness is so frequently forgotten when talking about pricing in the real world. I mean, lowered costs just means the grocery chain stands...

    They could. They won't but they certainly could.

    Price stickiness is so frequently forgotten when talking about pricing in the real world. I mean, lowered costs just means the grocery chain stands to increase profits if they can keep pricing at the same level.

    34 votes
    1. [2]
      cdb
      Link Parent
      Price stickiness is more applicable to restaurants than groceries. Grocery prices tend to be quite volatile, and both increase and decrease all the time. Some BLS data of selected items shows...

      Price stickiness is more applicable to restaurants than groceries. Grocery prices tend to be quite volatile, and both increase and decrease all the time. Some BLS data of selected items shows significant ups and downs in prices, and this is in aggregate across thousands of data points across the country. You're likely to see a lot more changes in prices in your local grocery store. One week cabbage might be $1/pound, the next week it's $2/pound, then the week after it's back down to $1/pound. Things like this happen all the time. Anyway, I don't think price stickiness has much to do with explaining higher prices at grocery stores.

      20 votes
      1. Octofox
        Link Parent
        There was a time where avocados were reasonably expensive in Australia. Then all the farmers planted a bunch of trees to cash in on it. Now they are so overproduced that they are dirt cheap in...

        There was a time where avocados were reasonably expensive in Australia. Then all the farmers planted a bunch of trees to cash in on it. Now they are so overproduced that they are dirt cheap in supermarkets.

        6 votes
  2. [2]
    supergauntlet
    Link
    He's right and he should say it. But talk is cheap, make them do it. Start threatening corporate tax increases, and then do it if they don't. If only Congress could do anything useful at all.

    He's right and he should say it. But talk is cheap, make them do it. Start threatening corporate tax increases, and then do it if they don't.

    If only Congress could do anything useful at all.

    17 votes
    1. MrFahrenheit
      Link Parent
      They could, but then republicans would prove that government can actually work and their whole shtick is proving that it can't by sabotaging it.

      They could, but then republicans would prove that government can actually work and their whole shtick is proving that it can't by sabotaging it.

      17 votes
  3. [6]
    Akir
    Link
    Are these prices really a result of grocers keeping prices high, or is it the suppliers they buy from? I'm honestly a bit out of the loop when it comes to the food price squeeze. For one I've...

    Are these prices really a result of grocers keeping prices high, or is it the suppliers they buy from?

    I'm honestly a bit out of the loop when it comes to the food price squeeze. For one I've always searched for low prices when grocery shopping, so I tend to ignore the higher prices altogether, and beyond that the price hikes seem to be mostly on processed foods and animal products, both of which I generally avoid. So from my perspective it seems like the food processors are the most likely culprits.

    6 votes
    1. cdb
      Link Parent
      Walmart, Albertsons, Kroger, and Aldi are all reporting net profit margins of under 2%. Hard to say that grocers are reaping much benefit from higher prices.

      Walmart, Albertsons, Kroger, and Aldi are all reporting net profit margins of under 2%. Hard to say that grocers are reaping much benefit from higher prices.

      16 votes
    2. [3]
      devilized
      Link Parent
      I'm inclined to believe that it's a culmination of the entire supply chain that has enjoyed increased profits after their own costs have decreased. Kroger and Albertsons have a net profit margin...

      I'm inclined to believe that it's a culmination of the entire supply chain that has enjoyed increased profits after their own costs have decreased. Kroger and Albertsons have a net profit margin of about 2%.

      10 votes
      1. [2]
        Nazarie
        Link Parent
        I feel like in that case they should just invest a bunch of cash in a low risk instrument and make more that 2%. Of course, the reality is more likely that their profit is greater but through...

        I feel like in that case they should just invest a bunch of cash in a low risk instrument and make more that 2%. Of course, the reality is more likely that their profit is greater but through creative accounting it's not. But, I'm not an expert in any of this, so I'm quite possibly wrong.

        1 vote
        1. Minori
          Link Parent
          I mean it's a big business with a lot of money flowing through since all communities need grocers. It's just that once they pay all their employees and deduct the wholesale price, their profit...

          I mean it's a big business with a lot of money flowing through since all communities need grocers. It's just that once they pay all their employees and deduct the wholesale price, their profit margin is pretty low. They make money, but there isn't much room for profiteering.

          10 votes
    3. knocklessmonster
      Link Parent
      The retailer/seller ultimately sets the price you pay, based on MSRP, their price, and market dynamics. To a point, barring any expensive-to-exit contracts, etc, they could do this. I think the...

      The retailer/seller ultimately sets the price you pay, based on MSRP, their price, and market dynamics. To a point, barring any expensive-to-exit contracts, etc, they could do this.

      I think the goal of the Biden administration is to keep price increases for food from ratcheting infinitely upward, gently for now with a suggestion.

      2 votes
  4. [11]
    Mindlight
    Link
    That's not how capitalism works. It's not about what is fair to charge. It's about what the customer is prepared to pay. Since the majority of supply is controlled by a few there are no choice for...

    That's not how capitalism works.

    It's not about what is fair to charge. It's about what the customer is prepared to pay.

    Since the majority of supply is controlled by a few there are no choice for the customers and the demand.

    Fix the root cause and the rest will solve itself.

    6 votes
    1. [10]
      FrankGrimes
      Link Parent
      I think the problem with groceries, is the customer doesn't always have a choice. I can't go to buy food and decide the price is too high, so I'll just not eat today. Sure, I can skip getting...

      It's about what the customer is prepared to pay.

      I think the problem with groceries, is the customer doesn't always have a choice. I can't go to buy food and decide the price is too high, so I'll just not eat today. Sure, I can skip getting chips or ice cream, but it's harder to do that with the basics.

      13 votes
      1. [9]
        GenuinelyCrooked
        Link Parent
        That problem isn't with groceries, it's with capitalism.

        That problem isn't with groceries, it's with capitalism.

        4 votes
        1. [8]
          BitsMcBytes
          Link Parent
          What economic model yields better results for food?

          What economic model yields better results for food?

          7 votes
          1. [7]
            GenuinelyCrooked
            Link Parent
            I'm not a farmer, an economist, or a political philosopher. I don't have to know what the answer is to recognize that a problem exists.

            I'm not a farmer, an economist, or a political philosopher. I don't have to know what the answer is to recognize that a problem exists.

            8 votes
            1. [6]
              Minori
              Link Parent
              There have been fewer famines under capitalist countries than any other systems ever in the history of humanity. Sure, we can still do a lot better at allocating food and making sure no-one goes...

              There have been fewer famines under capitalist countries than any other systems ever in the history of humanity. Sure, we can still do a lot better at allocating food and making sure no-one goes hungry, but we have never fed as many people as we do now.

              1 vote
              1. [2]
                PuddleOfKittens
                Link Parent
                In this statement, are we defining "capitalist countries" as "countries with a free market for food"? Because if so, frankly there aren't any countries that meet that definition. Especially not...

                There have been fewer famines under capitalist countries than any other systems ever in the history of humanity.

                In this statement, are we defining "capitalist countries" as "countries with a free market for food"? Because if so, frankly there aren't any countries that meet that definition. Especially not the US, who are infamous for their heavy farming subsidies and the resulting corn exports.

                I'm not saying that these subsidies are bad - keeping food stable at the cost of economic efficiency is just important to preventing a revolution as having a military - but it's "not capitalism". Or to put it another way: suppose Country X ran it's entire economy with a similar system to the how it handles its' food; would you still consider Country X to be a capitalist country?

                This seems like an obvious fallacy of taking a statement that's true about the whole and assuming it's true about all the component parts too - "humans are mostly flesh, so human bones are also mostly flesh".

                (I put "not capitalism" in quotes because capitalism includes the political economy that inevitably results in regulatory capture and subsidies and destroys the pure free market that some people claim is the core feature of capitalism. So I'd call it capitalism, but some others wouldn't.)

                3 votes
                1. Minori
                  Link Parent
                  I mean there are essentially zero anarchocapitalist countries that are 100% laissez-faire. The fundamental orientation of the market is still capitalist; subsidies and market interventions fit...

                  I mean there are essentially zero anarchocapitalist countries that are 100% laissez-faire. The fundamental orientation of the market is still capitalist; subsidies and market interventions fit pretty squarely within a capitalist market-oriented framework.

                  1 vote
              2. [3]
                GenuinelyCrooked
                Link Parent
                I'd argue that had a lot more to do with nitrogen capture and the green revolution than with capitalism. Capitalism just happened to be the dominant economic system when that happened. And...

                I'd argue that had a lot more to do with nitrogen capture and the green revolution than with capitalism. Capitalism just happened to be the dominant economic system when that happened. And capitalism has taken those things and led us to overproduce to the point of cooking the planet while people still go hungry.

                1 vote
                1. [2]
                  Minori
                  Link Parent
                  The green revolution happened before authoritian communist governments were empowered in Eastern Europe and South America last century. The worst famines in modern history happened under nominally...

                  The green revolution happened before authoritian communist governments were empowered in Eastern Europe and South America last century. The worst famines in modern history happened under nominally communist countries with command economies.

                  1. GenuinelyCrooked
                    Link Parent
                    I'll happily agree that authoritarian Communism is not the answer to the problems with capitalism, while still not agreeing that the current form of capitalism that exists in America is the best...

                    I'll happily agree that authoritarian Communism is not the answer to the problems with capitalism, while still not agreeing that the current form of capitalism that exists in America is the best way to distribute needed goods.

                    1 vote
  5. PantsEnvy
    Link
    This is just political grandstanding. Yes, PPI for food has gone down (slightly), but when it shot up (by a huge amount), the CPI for food didn't shoot up immediately or by as much, and no one...

    This is just political grandstanding.

    Yes, PPI for food has gone down (slightly), but when it shot up (by a huge amount), the CPI for food didn't shoot up immediately or by as much, and no one complained.

    If prices are sticky going up (retailers were actually slow to pass on increased costs) then prices are sticky going down.

    4 votes
  6. skybrian
    Link
    I would expect sales and other temporary discounts instead, to attract customers without having to raise prices again when supplier prices go up again.

    I would expect sales and other temporary discounts instead, to attract customers without having to raise prices again when supplier prices go up again.

  7. [15]
    NoblePath
    Link
    That’s great, but the real greedflators in my area are restaurants. The sad cut is prices keep rising, quality is going down. I’ve quit eating out so much, which is maybe good for my health and...

    That’s great, but the real greedflators in my area are restaurants. The sad cut is prices keep rising, quality is going down. I’ve quit eating out so much, which is maybe good for my health and the planet anyway.

    My least favorite restaurant trend is only offering a large size side, and also charging extra for it. A burger and fries is now like $20 before tip, and i can only eat like a third the fries.

    2 votes
    1. [14]
      Akir
      Link Parent
      I'm not so sure restaurants are a good example of greedflation; if anything it seems like the prices were artificially low for a long time which would make the current prices seem like more than...

      I'm not so sure restaurants are a good example of greedflation; if anything it seems like the prices were artificially low for a long time which would make the current prices seem like more than it should be, but between the high inflation recently and the higher price of food it makes sense that they should have been going up. Do keep in mind that restaurants are a luxury.

      5 votes
      1. Octofox
        Link Parent
        It would seem that way. Restaurants are notoriously risky businesses that very often shut down from financial trouble.

        It would seem that way. Restaurants are notoriously risky businesses that very often shut down from financial trouble.

        8 votes
      2. [12]
        NoblePath
        Link Parent
        Fancy restaurants are a luxury. But it’s really hard to survive an urban or suburban environment with children and job without eating out sometimes. Affordable, healthy restaurants are a necessary...

        Do keep in mind that restaurants are a luxury.

        Fancy restaurants are a luxury. But it’s really hard to survive an urban or suburban environment with children and job without eating out sometimes. Affordable, healthy restaurants are a necessary part of a flow. I have sacrificed exercise time and kids extracurriculars to cooking; and our health for those circumstances when there’s no time to cook.

        What also irks me about American restaurants is the extraordinary waste-both in prep, and in affluent folks only eating part of their plate (a byproduct of portion inflation). But that’s a separate issue.

        4 votes
        1. [11]
          Akir
          Link Parent
          You may find it hard to go without it but it’s still hiring people to do work you are personally responsible for - the same as if you had hired a maid, for instance - so it still counts as a luxury.

          You may find it hard to go without it but it’s still hiring people to do work you are personally responsible for - the same as if you had hired a maid, for instance - so it still counts as a luxury.

          12 votes
          1. [3]
            Malle
            Link Parent
            By that same line of argument, would you also call grocery stores a luxury? Just as a restaurant, you're paying for people to do part of the work necessary to get food on your table. If you do, it...

            By that same line of argument, would you also call grocery stores a luxury? Just as a restaurant, you're paying for people to do part of the work necessary to get food on your table.

            If you do, it seems incongruent with what I think people generally would consider luxury. If you don't, the question might be more about how society works — a complex question — and we should be ready to consider that restaurants may be a necessity for some people in modern life.

            5 votes
            1. [2]
              iBleeedorange
              Link Parent
              No. The restaurant is another layer of workers on top of just buying the groceries. The restaurant not only buys the food, but also cooks it for you and serves you. Going out to eat is a luxury....

              No. The restaurant is another layer of workers on top of just buying the groceries. The restaurant not only buys the food, but also cooks it for you and serves you.

              Going out to eat is a luxury. Maybe it hasn't been like that in your life, but that doesn't mean that it isn't for everyone else.

              14 votes
              1. Malle
                (edited )
                Link Parent
                It has not been a necessity in my life, but I can understand if others find themselves in different situations. I do find it interesting that you see such a clear cut distinction in a process...

                It has not been a necessity in my life, but I can understand if others find themselves in different situations.

                I do find it interesting that you see such a clear cut distinction in a process which includes at least production, transport, processing, preparation, and serving.

                Just to be clear, I do think that a restaurant is closer to the luxury end of the spectrum than a grocery store is, but I don't think I would consider all restaurants — fast food restaurants for instance — as in the category of luxuries.

                5 votes
          2. [5]
            crazydave333
            Link Parent
            Consider that some people don't have kitchens where they can prepare or store food. Someone living in a motel room doesn't necessarily have that luxury and are at the mercy of the restaurants in...

            Consider that some people don't have kitchens where they can prepare or store food. Someone living in a motel room doesn't necessarily have that luxury and are at the mercy of the restaurants in their area to have something to eat.

            5 votes
            1. arch
              Link Parent
              You might want to see if you have access to a place like an Extended Stay America in a situation like that, they have pretty full kitchens in the rooms. But lets be honest, we are discussing edge...

              You might want to see if you have access to a place like an Extended Stay America in a situation like that, they have pretty full kitchens in the rooms. But lets be honest, we are discussing edge cases here. Living in even a cheap motel is not a frugal lifestyle, even for a short time. You're likely to pay hundreds if not thousands of dollars more a month then the cheapest room you would be able to find for rent, and any room should come with access to a kitchen with refrigerator. Then there are people who are truly poor and are either living at a campground or actually homeless, I doubt they are paying for prepared food in those instances though I could be wrong.

              8 votes
            2. [3]
              Akir
              Link Parent
              Every single cheap motel I have been to has a small refrigerator and if not an en suite microwave then at least access to one. You can cook without a stove and oven. If one is in this situation...

              Every single cheap motel I have been to has a small refrigerator and if not an en suite microwave then at least access to one. You can cook without a stove and oven. If one is in this situation and is going out to eat for every meal, that is a huge drain on funds and only further makes it unlikely they will be able to get permanent housing.

              The cheaprst fast food I can think of at the moment is Taco Bell, and they just announced a menu of items that are all under $3. But $3 is a pretty big about of money. That’s two heads of lettuce which can be broken down into about six salads. Two cans of beans that can be at least four servings. A can of luncheon meat that will become 3-4 servings. And I’m not talking about the tiny serving sizes they put on the nutritional labels either. You would have to buy at least two of those items on that menu to be satisfied, too, so after you get two items and the $1 “happy hour” priced drink you are at $7, which can easily get you 3-4 balanced meals if you buy the groceries instead.

              4 votes
              1. [2]
                crazydave333
                Link Parent
                A cheap motel room might have a fridge, but no freezer. That makes storing a bunch of microwave frozen dinners impractical. And if your hotel room doesn't have a kitchen, then it probably doesn't...

                A cheap motel room might have a fridge, but no freezer. That makes storing a bunch of microwave frozen dinners impractical.

                And if your hotel room doesn't have a kitchen, then it probably doesn't have knives or can openers or microwave safe dishes for you to chop up a head of lettuce or even open a can of beans. A kitchen is more than just an oven and a range; it's a whole set of utensils required to make your food.

                3 votes
                1. Akir
                  Link Parent
                  Knives, can openers, and dishes do not need to be stored in the kitchen. They are things you can take into a motel room and nobody will blink. And if you don’t have one of them you can buy them at...

                  Knives, can openers, and dishes do not need to be stored in the kitchen. They are things you can take into a motel room and nobody will blink. And if you don’t have one of them you can buy them at a dollar store. My examples don’t even necessarily need any of those; lettuce can be torn by hand and there are canned beans that have pull-top lids or laminated paper cartons, and do not need to be heated to eat. I’ve not seen a can of luncheon meat that can’t be opened by hand.

                  Microwave dinners won’t stay as long without a freezer, sure, but many of them don’t actually require you to keep them frozen and will last a while without the need to freeze them, and there are many other options that are both more satisfying and better for your health.

                  5 votes
          3. [2]
            NoblePath
            Link Parent
            How do you get to the conclusion that food prep is work “i am persinally responsible for?” And even so, how do you get to paying someone for that work is a luxury? If i am unable to prep myself,...

            How do you get to the conclusion that food prep is work “i am persinally responsible for?” And even so, how do you get to paying someone for that work is a luxury? If i am unable to prep myself, it seems that is necessary, not luxury. Also something about division of labor.

            3 votes
            1. Akir
              Link Parent
              I would consider it to be work that you are personally responsible for because it is a necessity for you and your children to live. People don’t last long if they don’t eat. This line of thinking...

              I would consider it to be work that you are personally responsible for because it is a necessity for you and your children to live. People don’t last long if they don’t eat.

              This line of thinking isn’t a hard and fast rule. It’s hard to say that hiring professionals with skills you lack is a luxury; a mechanic, for instance. But there are different levels to this situation in particular. You could make meals that require less preparation, for instance, or you could add in processed food, or pre-prepped meals like microwave dinners. But restaurants are nearly the peak of luxury. Fast food may be at the lower end of that bit of the spectrum that restaurants represent. Going to a restaurant means you have rejected all the other options because you value the services and qualities they offer over the economic and health benefits of cooking food at home.

              7 votes