FTC Chair Lina Khan announced that her agency would investigate the high cost of groceries in the U.S., citing "enormous profits" by chain supermarkets. During a joint FTC and Department of Justice public meeting, Khan remarked that grocery prices "skyrocketed during the pandemic, due in large part to the higher costs and supply chain disruptions." However, she noted that although costs have since fallen and supply chains have improved, many grocery items remain expensive. "Many items though, are still too costly, and many large grocery chains are still raking in enormous profits. The FTC is determined to understand why," Khan emphasized.
She plans to ask the commission to initiate an inquiry to understand why prices and profits remain high despite lower costs. An FTC report released earlier this year pointed to margin expansion as a significant factor in the persistent high prices. "Some firms seem to have used rising costs as an opportunity to further hike prices to increase their profits, and profits remain elevated even as supply chain pressures have eased," the report stated. It also highlighted that larger retailers and wholesalers, with substantial leverage over their suppliers, took more aggressive actions to protect their margins.
The consumer price index, a common measure of inflation, decreased for the first time since the pandemic in June, according to recent data. The investigation aims to shed light on the reasons behind the sustained high prices and profits in the grocery sector despite these improvements.
Link: The Hill
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