Vice President Kamala Harris said as president she would work to pass a federal ban on corporate price gouging on food and groceries in an attempt to lower the cost of living for families across the nation. This would be a first-of-its-kind federal law, though many states have laws addressing price gouging, and is clearly in response to Americans' frustration over their grocery bills, where inflation is felt most widely.
"My plan will include new penalties for opportunistic companies that exploit crises and break the rules," Harris said Friday at a campaign speech in Raleigh, North Carolina.
Harris said while prices went up during the pandemic due to supply chain failures, supply chains have since improved, but prices remain too high. And while households struggle to make ends meet due to elevated food prices, large food companies are seeing their highest profits in two decades and many aren't passing these savings on to the consumer.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
"Look, the bills add up. Food, rent, gas, back to school clothes, prescription medication. After all that, for many families, there's not much left at the end of the month," said Harris. "When I am elected president, I will make it a top priority to bring down costs and increase economic security for all Americans."
A ban on price gouging would prevent companies from unfairly exploiting consumers, and ideally, bring food prices down. But economists disagree on whether or not a federal price-gouging ban would work to lower food prices. While some blame corporate greed as a main driver of inflation, others believe that price gouging isn't actually a primary catalyst of inflation.
How much grocery prices have increased since the last election
Inflation has caused food prices to rise substantially over the last several years, and while prices are no longer increasing as much as they did over the last two years (rising just 1.1% over the last year), grocery costs remain a huge headache for many households. Nearly three-quarters of U.S. adults are stressed by everyday expenses, with groceries frustrating households the most, according to the latest USA Today Blueprint Credit Cards Survey.
Compared with four years ago, grocery prices are up about 20%, due to a mix of supply and demand pressures from the pandemic and other global events, reports the New York Times. And a study from GO Banking Rates found that from the last federal election on Nov. 3, 2020, to March 2024, food prices rose 25.8%, meaning $100 in groceries in 2020 would cost $125.80 today, for the same items.
Here’s a look at how much the average price of everyday food staples increased over that period as well:
- Eggs: 54%
- Milk: 36%
- Cheese and butter: 30%
- Cereals and bakery products: 28%
- Beef: 20%
- Chicken: 25%
- Fresh fruits and vegetables: 21%
The most recent Consumer Price Index (CPI) report showed that inflation continued to moderate, but key goods and services still had rising costs. In terms of which goods and services are driving inflation, food at home rose 0.1% in July, which is the same rate seen the previous month.
How do price-gouging bans work?
Over 30 states have laws around price gouging on the books, many of which apply to profiteering during wartime and states of emergency like natural disasters.
The way those laws work are generally by prohibiting raising prices by a certain percentage within a certain time period, as defined by the state. For example, in Maryland, during a state of emergency, you are not allowed to set a price for a good or service 15% or higher than the highest price of that good or service within four to 60 days before the state of emergency was declared. There are some exceptions, though, for example if you can prove that the price rise is consistent with seasonal prices based on historical data from the previous three years.
Many of Harris' critics have pointed to this policy proposal as a sign of price controls, which were instituted during inflation in the 1970s. While the policy wouldn't set prices, it would enable the Federal Trade Commission to investigate price swings, the Associated Press reported.
The specifics of Harris' idea of price gouging have not been defined. This lack of definition, as well as concerns about if this type of law would work in the way intended and if grocery prices actually need to be "saved" as inflation has cooled, have contributed to criticism of the proposal. The editorial board of the Washington Post, for example, referred to it as a "gimmick."
This is not the first time Harris has discussed tackling price gouging. In 2020, while serving as a senator, she and Sen. Elizabeth Warren, D-Mass., introduced a bill, the Price Gouging Prevention Act, banning price gouging during national emergencies, in response to the pandemic. Democratic senators continued to push for that legislation this year.
While politicians point to corporate greed causing grocery prices to rise, not everyone agrees with that assessment. Economists have pointed to rising prices as simply outcomes of changed supply and demand over the last four years. Even so, there are some cases of obvious changes to what consumers get for certain prices, like shrinkflation.
Related Content
-
Three Ways President Trump Could Impact the EconomyThe Letter Some of Trump's top priorities could boost economic growth, but others risk fueling inflation.
-
Average Health Care Costs by Age: Can You Afford It?Expect to pay more as you age. We've got solutions for how to cover these costs, which can exceed $1,000 per month in your 60s.
-
Saving for Your Emergency Fund: As Easy as 1-3-6An emergency fund that can cover six months' worth of expenses is far easier to build if you focus on smaller goals at first.
-
Blowout December Jobs Report Puts Rate Cuts on Ice: What the Experts Are SayingJobs Report The strongest surge in hiring since March keeps the Fed on hold for now.
-
The Wrong Money Question to Ask After Trump's ElectionIf you're wondering what moves to make with a new president moving into the White House, you're being dangerously shortsighted. Here's what to do instead.
-
All About Six Types of Auto Insurance CoverageDo you know what your auto insurance policy covers? Here's a primer on some coverage categories, along with examples of how each type of coverage works.
-
Why You Should Check Your College's Financial HealthColleges throughout the country are struggling financially as enrollment shrinks and expenses rise, making it important to check the financial health of the college your or your child is attending.
-
Where to Store Your Cash in 2025Take a fresh look at budgeting and savings opportunities for where to store your cash this year, to ensure you leave no stone unturned.
-
Financial Planning: Sisters Should Be Doin' It for ThemselvesMore and more women are ringin' on their own financial bells (with apologies to Aretha Franklin and Eurythmics) — but that demands a robust financial plan.
-
The Verizon Administrative Settlement Payment is a Reminder Class-Action Lawsuits Won't Make You RichPeople are receiving payouts from the Verizon administrative settlement and are surprised at how small they are. This provides a helpful financial lesson reminder.
