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Is price gouging driving grocery inflation?

By Keshav Srikant
NO

Grocery prices have risen faster than inflation in recent years, but increased input costs, not price gouging, is the primary driver.

Pandemic-related supply chain disruptions and the war in Ukraine have made resources such as oil, pesticides, fertilizer, machinery, seed, and feed more expensive. The pandemic also created a tighter labor market, prompting higher wages that have added to the cost of food production.

Additionally, eating habits shifted during the pandemic, away from restaurants toward home cooking, spurring grocery demand and therefore prices.

Between February 2020 and August 2024, the grocery store consumer price index increased 25.3%, while overall consumer prices excluding food and fuels rose 19.6%. Over the same period, wages gains have kept track with grocery inflation, rising 26%.

Grocery inflation slowed to 1.2% between January 2023 and August 2024.

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