In the wake of the release of the latest Consumer Price Index data showing an untenable seven percent year-over-year inflation rate, self-proclaimed “policy wonk” Senator Elizabeth Warren has identified the problem. It’s not two straight years of extravagant deficit spendingand Federal Reserve actions that have contributed to an unprecedented spike in the money stock over the past year. No, it’s those greedy grocery stores gouging prices.
According to Warren, the grocery industry is dominated by a small group of grocery stores like Kroger that can choose to “force” price increases onto Americans just to fatten their coffers. Only through antitrust action, Warren contends, can this sinister cabal be brought down.
Fortunately for American consumers, the grocery industry is far from consolidated. Kroger isn’t even particularly close to being the biggest player in the grocery industry — that would be Walmart, which holds twice the share of the U.S. grocery market that Kroger does. But even the biggest fish in the pond face plenty of competition, as the top seven largest chains in the U.S. control less than half of the grocery market in the U.S.
Besides, most Americans likely do not feel as though they are limited in their choice of grocery stores. The median distance for the third-nearest grocery store for Americans is 1.7 miles, indicating plenty of competition. Most Americans live within easy reach of at least two grocery stores, enough to easily switch if they feel their “usual” grocery store is getting too expensive.
But let’s for a second entertain Warren’s conspiracy theory of grocery store chains conspiring together to raise prices in concert to prevent Americans from shifting to a new store. If this were something grocery chains were capable of, why wait until this past year? If grocery chains were able to coordinate in this manner, grocery prices should have been inflated for years now.
In fact, it’s quite the opposite. Groceries are relatively inexpensive in the United States — Americans spend the smallest percentage of household income on groceries of any nationality. If the hallmark of an anticompetitive industry in need of antitrust action is consumer harm, then the grocery industry displays none of the signs.
Making Warren’s argument even sillier is the fact that grocery price increases have not occurred in a vacuum. While the price of groceries has increased by 6.5 percent year-over-year, that’s less than the overall inflation rate. Other indicators such as the prices of gasoline (50 percent inflation) and used cars (37 percent inflation) have increased far more than the price of groceries without Warren claiming the need for antitrust enforcement against Big Used Car.
The simple truth is that Warren is simply the latest in a long line of Democrats blaming everything but their own policies for rampant inflation. In less than a year after the onset of the pandemic, Congress doled out $7.5 trillion in largely deficit-financed funds. Some of that was a necessary emergency response, but much of it went well beyond what was necessary to keep businesses and temporarily laid-off workers afloat during lockdowns and speed up the development of vaccines and tests.
No grocery chain, and certainly not Kroger, enjoys the kind of market dominance necessary to unilaterally gouge prices without consequences. That’s a good thing for American consumers, but inconvenient for Democrats’ weak efforts to deflect blame for inflation from their own irresponsible fiscal policies.
