Grocery price spike leads to formal inquiry in Connecticut

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Grocery price spike leads to formal inquiry in Connecticut

A March 21 Federal Trade Commission (FTC) report is making waves in Connecticut, where authorities will probe alleged grocer price gouging that contributed to historic inflation and higher profits.

U.S. food prices continued to rise in 2023, increasing by 3.3% between October 2022 and 2023, according to USDA data.

FTC’s analysis, Feeding America in a Time of Crisis, looked at supply chain disruptions during the 2020 COVID-19 pandemic. One of the report’s key findings related to a spike in grocery retailer profits.

“Publicly available data on general grocery retail patterns reveal that during the pandemic, one measure of annual profits for food and beverage retailers rose substantially and remains quite elevated,” the report stated.

Walmart, Amazon, Kroger, C&S Wholesale Grocers, Associated Wholesale Grocers, McLane Co., Procter & Gamble, Tyson Foods, and Kraft Heinz were among the retailers examined in the report.

Related articles: FTC report suggests US grocers profited from inflation

Following its publication, Connecticut State Senate Majority Leader Bob Duff contacted Attorney General William Tong. That resulted in a formal inquiry into price gouging, announced this Thursday.

“We will keep going until we have an understanding of this market,” Tong said during the inquiry announcement.

According to Duff, price gouging could be responsible for 50% of inflation, which has seen an unprecedented uptick in recent years.

The inquiry aims to provide a detailed landscape of the state’s grocery marketplace and will examine both large and small grocers.

The FTC’s March document particularly noted that food and beverage retailer revenues increased to more than 6% over total costs in 2021. 

“This casts doubt on assertions that rising prices at the grocery store are simply moving in lockstep with retailers’ own rising costs,” the report warned.

But even with the end of the pandemic and the supply chain reaching a “new normal,” retailer profits continued to soar, the FTC said. 

According to a United States General Accounting Office estimate, retail food prices rose 11% between 2021 and 2022. Additionally, retailer revenue reached 7% over total costs in the first three-quarters of 2023.

The AG’s inquiry comes on the heels of the state Senate’s hope to introduce Bill 3, which aims to provide the role with additional powers to combat price gouging.

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