If someone would have asked me the definition of price gouging before COVID-19 I probably would have said something like, “Price gouging is when gas stations jack up the price of gas during a hurricane.” Until yesterday I’ve never really thought that much about it because it rarely ever touched my life. What happened yesterday? I went grocery shopping.
I have a pretty firm grocery budget of $150 a week. Sometimes I go a little over, sometimes a little under, but for the past few years I’ve always been able to feed my family of 4 for a week on that $150. I’m also a well-seasoned baker and cook so I know how to pinch my pennies and still provide a tasty, nutritious meal.
Yesterday, my $150 got us enough food to last 4, maybe 5 days. So, I did a little research to find out why grocery prices aren’t coming back down now that everything has been open for at least 2 months.
There are two reasons grocery prices rose during the pandemic
The first was a break-down in the supply chain, which is totally understandable. People from one end of the supply chain to the other were getting sick. Factories and processing plants were closed. When they began to open back up again employers had to pay overtime so workers could catch back up with the demand. And many employers had to offer pay incentives to entice employees to risk coming back to work.
That all makes sense and, for the most part, it’s acceptable. These companies are recovering and they’re compensating their employees accordingly. In the process, prices on products like meat, eggs and cheese have dropped back down to pre-pandemic levels.
The Second Reason Is Greed!
The first thing I look at when I go grocery shopping is the price of meat. It’s usually the most expensive part of a meal so I shop for the meats first so I know how much money I have left for everything else on my list. This little system has worked for me for years, but not yesterday. Because the second reason grocery prices rose during the pandemic is greed. And greed breeds more greed!
Because consumers can’t go out to restaurants, more people are cooking at home, now. That means three meals a day, plus snacks, desserts, donuts and coffee, and sodas. Again, it’s easy to understand why there’s an increase in demand for almost everything you can imagine in a grocery store. But if manufacturing facilities and supply chains are open and moving, why are prices still rising?
If there’s enough product to more than meet the demand, then isn’t it considered ‘price gouging’ if the prices continue to rise?
I do a lot of baking to help save money. I bake breads and dinner rolls, and tons of cookies. (If you have teenage kids in your house you’ll understand why all the cookies!) According to an article in USA Today just 4 days ago, flour prices are at the highest they’ve been since May of 2013. From February to June of 2020, flour prices increased 4.5% due to a “surge in demand.”
“Flour is a critical ingredient in baking – an activity that surged in popularity as Americans have been confined to their homes during the pandemic. Vermont-based company King Arthur Flour reported a 2,000% increase in flour sales in March 2020 compared to the same month the previous year.”
Between February and June of 2020 the price of breakfast cereal jumped 5.9%
“Once people started working from home and were more likely to eat breakfast there as well, cereal prices began to spike.” Again, the ‘surge in demand’ thing.
The price of peanut butter, because of its perceived nutritional value and the fact that it’s shelf-stable, increased 7.9%, also due to increased demand.
Carbonated sodas! Your favorite soda jumped 5.1% in price due to increased demand. You and I both know there’s enough Pepsi, Coke and Mountain Dew sitting in warehouses to fill the world’s oceans over and over again, so why should ‘demand’ affect the price?
Here’s the definition of price gouging
Price gouging occurs when a seller increases the prices of goods, services or commodities to a level much higher than is considered reasonable or fair. Usually, this event occurs after a demand or supply shock. Common examples include price increases of basic necessities after natural disasters.
This article posted on August 3, 2020 at Business Insider demonstrates how billionaires like Amazon CEO Jeff Bezos, Zoom founder Eric Yuan, Microsoft CEO Steve Ballmer, Elon Musk and scads of others, have managed to become $637 billion richer during the coronavirus pandemic. But these guys are always in the news. Everybody knows these guys would sell their grandmother if it meant they could put a few extra bucks in their pocket.
What isn’t being discussed is the companies who are raising their prices due to a ‘surge in demand.’ The nameless, faceless companies out there who grind the corn and then jack up the price of flour. The companies that grind the peanuts and then jack up the price of peanut butter. The companies that mix water and sugar, add a few bubbles and coloring and call it soda, and then jack up the price of soda.
Are we not discussing these companies because we can’t tie them to a face with a name, like Jeff Bezos or Elon Musk?
Do they get to get away with price gouging because we don’t know the name of the guy who sits in the CEO seat?
The folks in Washington sit up there and argue about whether or not they’re going to send out relief checks or increase unemployment benefits, all while turning a blind-eye toward these billion-dollar corporations that are literally bending Americans over a barrel. “Here ya go. Ya wanna eat? Ya gotta pay for it!”
Again, why is there an increase in grocery prices due to a ‘surge in demand’ if we clearly have enough product to more than meet the demand? More important, are we now so whipped into submission that we’ll just sit back and allow these companies to dip further into our already penniless pockets simply because there’s an increase in demand?