Vice President Kamala Harris is zeroing in on high food prices as her campaign previews an economic policy speech that she will give in North Carolina on Friday, promising to push for a federal ban on price gouging on groceries.
Harris is putting particular emphasis on rising meat prices, which she says account for a large part of rising grocery bills.
Year-over-year inflation has reached its lowest level in more than three years. But many in the United States are struggling with food prices, which remain 21% above where they were three years ago. Republican presidential nominee Donald Trump has been pointing to inflation as a key failing of the Biden administration and its energy policies.
Harris is putting an emphasis on food prices even in addition to drug costs, the focus of an official event Thursday with President Joe Biden in Maryland. That will be her first joint speaking appearance with Biden since she replaced him at the top of the Democratic ticket.
They are announcing that drug price negotiations will knock hundreds of dollars — in some cases thousands — off the list prices of 10 of Medicare’s most popular and costliest drugs.
Biden has undertaken his own efforts to contain rising food prices, including creating a “competition council” that tried to reduce costs by increasing competition within the meat industry, part of a broader effort to show his administration is trying to combat inflation.
Asked Thursday if he was concerned Harris would seek to distance herself from his economic record, Biden told reporters, “She’s not going to.”
Americans are more likely to trust Trump over Harris when it comes to handling the economy, but the difference is slight: 45% say Trump is better positioned to handle the economy, while 38% say that about Harris. About 1 in 10 trust neither Harris nor Trump to better handle the economy, according to the latest The Associated Press-NORC Center for Public Affairs Research poll.
Consumer confidence surveys show that high prices remain a persistent source of frustration for shoppers, particularly among lower-income Americans, even as inflation has cooled. Overall prices are about 21% higher than before the pandemic, with grocery prices one of the most visible examples of that structural shift to higher costs.
At the same time, average incomes have risen by slightly more than that, boosting spending even as Americans report a gloomy outlook on the economy.
Some meat prices, however, have risen by even more than overall inflation: Beef prices have soared nearly 33% in the four and a half years since the pandemic began, while chicken prices have jumped 31%. Pork is 21% more expensive, according to government data.
Supply disruptions during the pandemic were one reason prices rose. Many meat processing plants closed temporarily after COVID-19 outbreaks among their workers.
But the Biden administration has charged that corporate consolidation in the meat processing industry has played a larger role by enabling a small number of companies to raise their prices by more than their input costs.
Four large companies control 55%-85% of the beef, chicken, and poultry markets, the White House said in late 2021, including Tyson and JBS. JBS eventually paid out multi-million dollar settlements in lawsuits accusing them of fixing prices, though they didn’t admit wrongdoing as part of the settlements.
Some economists have argued that large food and consumer goods companies, including PepsiCo and Procter & Gamble, took advantage of pandemic-era disruptions to raise their prices by more than the cost of inputs, and sharply increased profits.
Economist Isabella Weber at the University of Massachusetts, Amherst dubbed it “seller’s inflation,” while others more memorably referred to it as “greedflation.”
In an influential paper, Weber wrote that “publicly reported supply chain bottlenecks” can “create legitimacy for price hikes” and “create acceptance on the part of consumers to pay higher prices.”
Yet Harris’ proposals on price gouging come as there is some evidence that so-called “sellers’ inflation” is fading. Consumers have become more discriminating, and are forgoing some higher-price purchases while seeking out cheaper alternatives. Walmart on Thursday announced strong sales this summer as more consumers sought out its lower prices.
Grocery prices, on average nationwide, have risen just 1.1% in the past 12 months, in line with pre-pandemic increases, the government said Wednesday.
The meat industry has been fending off allegations of price gouging and price fixing for years, and the major players dispute the notion that the extreme consolidation in the industry is to blame for high prices.
At a Congressional hearing two years ago, the CEOs of the four companies that control nearly all of the beef market — Tyson Foods, JBS, Cargill and National Beef — argued that soaring the soaring costs of feed and fuel along with persistent labor shortages and supply and demand forces were to blame for higher prices — not anticompetitive behavior.
Plus, there were significant meat production disruptions during the pandemic as COVID spread through meat plants like wildfire and forced temporary closures and additional safety precautions. And the ongoing bird flu outbreak that has prompted the slaughter of more than 100 million birds since early 2022 has taken a toll on the poultry industry. Years of drought have limited the number of cattle being raised across the country.
The industry’s defense is supported by their balance sheets that generally show soaring expenses squeezing profits in recent years, prompting some companies like Tyson to close some of their less-efficient plants to reduce costs.
Kansas State University agricultural economist Glynn Tonsor said “the cost of raising the animal, the cost of converting it into meat, and the cost of getting that meat to people is higher than it was.”
“Yes, consumers are seeing higher prices, but it doesn’t necessarily mean somebody is gouging them,” Tonsor said.
And he said the consolidation in the industry all generally happened decades ago, so it’s harder to argue that it has been a large factor in prices in the last couple years.
Beef, pork and chicken producers have all been accused of price fixing by retailers, farmers and food distributors in a number of lawsuits in recent years. Tyson, JBS, Smithfield Foods, Purdue Farms and other major meat companies have collectively agreed to pay hundreds of millions to settle some of those lawsuits though they haven’t admitted any wrongdoing.
And the allegations in those lawsuits are all generally based on things that were done years ago — long before the pandemic disrupted production and record inflation drove costs higher.
Biden has previously suggested that increasing competition in the meat industry would help reduce food prices, and his administration offered $1 billion to help build and expand independent meat processing plants. But it’s hard for small processing plants to make a significant difference in these markets that are dominated by a handful of huge companies.
The head of the Meat Institute trade group, President and CEO Julie Anna Potts, said Thursday that Harris’ proposal wouldn’t solve the problems of inflation that has driven the price of everything up.
“Consumers have been impacted by high prices due to inflation on everything from services to rent to automobiles, not just at the grocery store,” Potts said. “A federal ban on price gouging does not address the real causes of inflation.”
The trade group cited a New York University study that shows the average profit margin for food producers is about 6% — well below the profits in some other sectors like software and railroads that enjoy margins north of 20%.
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AP Business Writers Josh Funk in Omaha, Nebraska and Chris Rugaber in Washington contributed.
