44
votes
This Austrian website exposes the truth about soaring food prices
Link information
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- Authors
- Matt Burgess, Chris Baraniuk, Reece Rogers, Megan Gray, Matt Alston, Amanda Hoover, David Gilbert, Peter Guest, Erica Kasper, Will Knight, Dhruv Mehrotra
- Published
- Oct 3 2023
- Word count
- 1855 words
Food prices in Europe have been soaring. Earlier this year, the Austrian government said it would build a price database to let people compare costs at different supermarkets. It said this would take months to make and only include a small number of product categories.
Within 2 hours, a programmer had built a first prototype, pulling the data from supermarket's websites, and open sourced the project. Now Heisse Preise lists 177,000 products from 10 chains.
The transparency has allowed prices to be compared: and the results appear to show supermarkets are watching each other and adjusting their prices based on others. The competition authority is investigating and already said new laws should make supermarkets publish proper APIs with full item data
Good software takes time and money. I feel like a very usable and useful site can be hacked together over a weekend by a single person, but it's basically at an alpha-use-at-your-own-risk level of development. Maybe this kind of thing is more efficiently handled at the grassroots level, but if the government is going to release a website like this, they should definitely take more time to develop something more polished. I'd be more upset if they didn't take at least a few months and rushed some garbage out the door.
Why unfortunately? Isn't this exactly what we want out of a business? Prices change based on demand and competition, and that's a good thing. Why would we want this to be illegal?
edit: I just searched for the top grocery chains in Austria, and google told me the top 2 are REWE and SPAR. The first few results on these told me that both are reporting profit margins of 1-2%. This was just a quick search, so someone correct me if I'm wrong, but that's abysmal for purportedly price gouging. So what exactly are they trying to fight here?
Forgive me, but isn't that, like, the way the free market is supposed to work? All firms end up settling into an equilibrium price?
It doesn't have to work in any way. The only "rule" of capitalism is that items are priced higher than the cost to make/sell them. And even that rule doesn't really matter anymore with the copious amount of cash the wealthy have.
The stores could angle for the cheapest prices or they could start a price raising war where they all nudge the price up overtime. The consumer can't do shit about either solution except not buy at all, but that doesn't work for some goods. It's exactly what the rental market did, they just kept increasing the price to be only slightly more expensive than the competition, knowing it wouldn't really affect they're sales. Do it for a few years and suddenly housing is fucking crazy. I see no reason why milk and eggs couldn't do the same thing.
Or, to be more precise, a firm must (in the long run) make revenue at least equal to its operating costs. Individual items don't have to be profitable.
However, the fact that a free market will settle at an equilibrium price is literally Econ 101; and, in fact, it's something that I think most econ people would point to as a virtue of free markets. And it works both ways: firms will raise prices as much as they can in the name of profit, but no higher, lest consumers go elsewhere. An economist would tell you that price fixing is, in general, unlikely, since it's a kind of prisoner's dilemma: every business has an incentive to deviate in order to steal customers via lower prices.
I'm no staunch defender of capitalism, but I don't think that everything that economists say is fundamentally unsound. We should at least pay attention.
The reason why housing is so expensive is much simpler than that: everybody needs a place to live, and there aren't enough places to live.
... but with competition driving prices down ( as in the free market working the way it is supposed to ).
In any nation these days there are only a small number of grocery chains. A few set the price, and the others raise their prices to match...what the database in the article seems to show.
Not necessarily! This is what market evangelists tend to emphasize because it's easy to make it sound good, but the existence of a market equilibrium implies that if that equilibrium shifts upward, then actual prices will also shift upward. And while this sounds bad, the alternative is shortages, so it is viewed as "efficient".
This is a potential reason to view the market as unfree, since a "free market" is a theoretical abstraction that assumes essentially an infinite number of firms. I can't say whether it actually makes a meaningful difference in this case. Prices are going up everywhere.
I think API's something where the government can do a lot of good if we ever get people who understand tech into office, and should be something much much much more standardized.
Or it could wind up a bureaucratic nightmare hellscape you hire a consulting firm to handle because no one can agree on how it works.
I read an article about this before (probably from a link on this website if I had to guess) and the whole system has some pretty major consumer-facing flaws.
All of these supermarket chains obfuscate the real prices of things by having the "sticker price" and then having massive discounts that are marketed uniquely to the individual.
As an example, I needed some paper towels yesterday. The package was $18. Nobody was ever going to pay $18 for a package of paper towels, but that's what the website showed. But wait, I have a customer card! That means that I am eligible for [whatever] discount! Also, I have a "digital coupon" available for basic household consumables that knocks off another [whatever] amount. Oh, and because I spent over $100 on groceries last week, I have another discount applied to purchases this week.
The paper towels cost $7, which is what I kind of guessed that they would cost when I went into the store without actually looking up the price of paper towels. There is no public facing API that will show all of the stupid combinations of discounts and nonsense that ends up on the final price tag.
There are probably plenty of people that would see all of those discounts and think they came out ahead and got one over on the grocery store by stacking their coupons cleverly, but that's never how these things work. They've just hyper-inflated the prices so that it makes no difference what combinations of discounts you have, it always comes out about the same.
Yep, and the fact that you bought X amount of Y brand paper towel at Z time interval? Guess what they're doing with that data? They sell your purchasing habits using the customer card to squeeze even more revenue out of your shopping.
Yeah, it is even further anti-consumer the more you look into it. I just meant that the entire "scraping public APIs for costs" strategy does not really tell the tale.
When you shut down food production and most other manufacturing for 2 years in almost all major producing countries, then prices are inevitably going to go up when businesses reopen and are having to recover from lost crops, livestock, and other capital. All the governments that shut down everything are acting like it's some grocery store conspiracy to raise food costs rather than the result of their actions.
Personally, I think blaming it "on the supply chain" is a bit overused. Similar to blaming price gouging on "inflation".
When you shut down production of a huge percentage of items worldwide for 2 years, it can really throw a wrench in the economic gears. There were farmers killing their livestock and burying them because the slaughterhouses were closed and they couldn't afford to feed them. Just that example alone affected food prices for everything from beef and chicken, to eggs, milk, cheese and other items coming from livestock including medicines.
That is just 1 of thousands of industries that suffered huge losses because of government enforces shutdowns. Then there's mining shutdowns, which lead to shortages of metals for manufacturing of tons of items including electronics. That caused huge backups in vehicle manufacturing, phone manufacturing, and many many other things.
This isn't even 1/1,000 of just the tip of the iceberg when it comes to the devastating results of a worldwide shutdown.
All the people who said that this would happen were accused of caring more about money than lives. Now that it's happened people seem to have no clue why it happened, and just dismiss anyone that points out that they were trying to warn of this exact thing for years.
https://archive.ph/8EQqn
The original idea, to have the government make food prices easier to see to have consumers find the lowest cost goods, seems flawed. The amount of pressure this would exert to lower prices probably wouldn’t be tremendous, and I assume many goods are going up in price for real reasons and not just stores getting away with it.
I agree with you. The price difference for the same items in different packages at the same store can be fairly drammatic. I just pulled up the prices at the local walmart and they sell a 16 oz bottle of name-brand peanut butter for roughly the same price as a 40 oz bottle of the store brand.
I imagine the situation is slightly different throughout Europe, but here in the US the thing I think is worst about food prices is the processed foods. Not only are they terrible for your health, you're paying a premium on items that are mostly water, sugar, or oil. Take Coca-Cola, for instance, which costs nearly $3 for a 2L bottle. That bottle is probably around 95% water. 2L of tap water doesn't even cost a penny. For any given bottled beverage, the single largest expense is likely the bottling and transportation. For another example, I just bought a vegan frozen meal for about $6-7. On the other side of the same aisle there was a bag of frozen vegetables that cost 99 cents. The "fancier" packages were $2-3. Both of those options actually had more food than the one marked as a meal.