Economic Indicators

Grocery stores should cut prices as costs ease, Biden White House says

2024.02.02 15:36


© Reuters. FILE PHOTO: A lady outlets for groceries at El Progreso Market within the Mount Pleasant neighborhood of Washington, D.C., U.S., August 19, 2022. REUTERS/Sarah Silbiger/File Photo

By Trevor Hunnicutt

WASHINGTON (Reuters) – U.S. President Joe Biden’s administration is taking intention at grocery chains, sending an election-year suggestion that the businesses decrease prices on items from milk to eggs and bread.

“Our message is a very clear one that the president has and will continue to lean into, which is, if you’re a company whose input prices have come down and you’re not passing those savings along to the consumer, he will call you out,” stated Jared Bernstein, the chair of Biden’s Council of Economic Advisers, in a digital assembly with reporters.

“We’ve seen elevated (profit) margins, particularly in the grocery sector, and have taken note that there needs to be more pass-through there (to consumers).”

Bernstein didn’t identify any particular firms.

Grocery giants Walmart (NYSE:), Kroger (NYSE:) and Albertsons (NYSE:) are reserving 20-plus p.c gross revenue margins, roughly consistent with the place they have been earlier than the COVID-19 pandemic spiked inflation.

A White House evaluation of Census information reveals food-and-beverage retailers’ revenues as a share of their costs have risen sharply from earlier than the pandemic to a degree not seen because the mid-2000s, a measure that they are saying extra straight tracks retail mark-ups.

Last week, Biden stated “there are still too many corporations in America ripping people off: price gouging, junk fees, greedflation, shrinkflation.” Biden has pushed drug makers to decrease insulin costs, resort chains to scale back charges and tried to diversify the meat-packing trade after beef prices skyrocketed within the aftermath of the pandemic.

Biden’s pitch for decrease grocery store prices comes forward of the Democrat’s November bid for re-election. A cavalcade of sturdy financial information – together with blockbuster jobs and wage numbers on Friday – has not translated into good approval scores for Biden, with voters nonetheless saying they’re involved about excessive costs.

Consumer confidence is enhancing, Bernstein stated, citing the University of Michigan client survey that confirmed sentiment rising to its highest degree since July 2021 and noting the current sturdy U.S. inventory market run.

“As inflation continues to ease and the job market remains tight and real wages and wage growth continue to beat price growth, that should start to show up as improved confidence,” he stated.

“We’re also working hard to lower costs – actual lower costs, not just lower inflation,” stated Bernstein, citing eggs, milk, home equipment, airfares, used vehicles and gasoline as notably delicate areas for Americans.

While eggs solely account for 0.1% of the buyer value index, Bernstein stated, “in the national psyche it’s a lot bigger than that and we’re very cognizant of that.”

The United Nations meals company’s world value index fell in January to its lowest degree in practically three years, pushed by declines in cereals and meat.

Kroger and Albertsons plan to shut on a proposed $24.6 billion merger later this yr, pending an antitrust evaluate amid fears that the deal may elevate prices.

“We agree with President Biden,” a Kroger spokesperson stated. “Too many grocers in America have increased margins in contrast to Kroger.”

The spokesperson added that the merger would “lower prices for even more of America’s consumers by delivering at least half a billion in additional price investments at Albertsons stores.”

A spokesperson for the National Grocers Association, which represents unbiased grocers, known as for stricter antitrust enforcement and stated “the nation’s largest retailers have used their muscle to force food suppliers to offset higher production costs by charging their smaller rivals higher prices.”

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