Despite declining inflation, Americans are paying more than they did last year for grocery purchases and dining out. Vice President Kamala Harris proposed a plan last month to eliminate price gouging, which she says is keeping food prices artificially high.
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GOBankingRates talked to economic and policy experts about ways Harris’ economic policies could affect your grocery bill and your wallet if she’s elected.
Ban Excessive Pricing
According to the latest Consumer Price Index, consumers are paying 1.1% more for grocery store items and 4.1% more for eating out at restaurants than they did last summer.
Harris blames corporate greed and price gouging for causing this food inflation.
“Many big grocery chains that have seen production costs level off have nevertheless kept prices high and have seen their highest profits in two decades,” the Harris-Walz campaign noted in a press release. “While some food companies have passed along these savings, others still have not.”
“Vice President Harris returned to her (California) attorney general roots by going after price gougers,” said Bruce Thompson II, an attorney and Democratic influencer and lobbyist. “There have been a range of forces causing consumer price increases, and price gouging is on that list.”
However, grocery store industry organizations say retailers aren’t to blame for rising food prices. A June report from the Food Industry Association noted that the average grocery store profit margin was 1.6% in 2023, the lowest margin since the 1% average in 2019.
Harris proposed implementing the first federal ban on excessive pricing in the food and grocery industries. Her plan would give federal agencies the authority to regulate and cap food prices that are considered too high relative to production and other costs.
That regulation could reduce your grocery bill if grocery stores and other companies in the food industry are found to be price-gouging. Otherwise, the regulations are likely to have little, if any, immediate effect but could protect you against unfair prices in the future.
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Create Stability
Federal controls could prevent prices from going too high or falling too low. Ideally, they would protect consumers from overly high prices during shortages and ensure fair wages for workers.
“The key to her plan is finding a way to prevent sellers from reacting to supply shortages by sharply increasing prices,” Thompson said. “Consumers are then protected from sudden price increases outside of normal economic forces. While it does not guarantee lower prices, the plan at least injects some certainly in the market.”
Unintended Consequences
Unintended Consequences
Even if they benefit consumers in terms of grocery costs and stable prices, Harris’ policies could have unintended negative effects on food quality and availability.
“Price controls do not solve the underlying problem of food affordability,” said Wayne Winegarden, an economist at the Pacific Research Institute. “Worse, it discourages businesses and farmers from expanding the supply of food, which worsens the related problem of food insecurity.”
Agricultural economist Harvey Hill agreed.
“Concerns about non-competitive practices are best handled through existing consumer protection laws and anti-monopoly regulations, not through price controls,” said Hill, who has lived and worked in emerging economies.
“In fact, price controls may reduce food producers’ incentives to increase food availability, which would impact the poor — the same people these measures are supposed to help,” Hill explained.
Additional Reforms Needed
Winegarden recommended a two-fold approach to addressing food inflation.
“When people are harmed by food inflation it is because the prices of food have risen faster than families’ incomes,” he said. “Put differently, it is a problem of food affordability.”
Winegarden said the first step is to promote policies that encourage faster economic growth while implementing more efficient and cost-effective income support programs.
“These reforms will help incomes grow faster than food prices and therefore improve food affordability,” Winegarden said.
The second step is to reduce food production costs by reforming policies that discourage retailers from being more efficient, or unnecessarily raising the costs of producing food.
“For instance, complex permitting requirements for remodeling a store, or threats of price controls,” Winegarden said.
Editor’s note on election coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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This article originally appeared on GOBankingRates.com: 2 Ways Kamala Harris’ Economic Policies Could Affect Your Grocery Bill
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