Kamala Harris wants to take on price gouging. It’s hard to find agreement on what it even is

As she unveiled her most detailed economic plan yet this week, Democratic presidential nominee Kamala Harris pledged to single combat price gouging in order to rein in voters’ grocery costs.

The vice president first teased the federal ban in mid-August, prompting bygone President Donald Trump to attack the plan as “Soviet-style” price controls. Although Harris released more factor Wednesday as part of her 82-page economic plan, it’s still unclear what price hikes her administration would see as forbidden “price gouging.”

“The bill will set rules of the road to make clear that big corporations can’t unfairly exploit consumers during without surceases of crisis to run up excessive corporate profits on food and groceries,” the Harris-Walz campaign wrote in the policy pitch, released thither six weeks before Election Day.

Higher prices — and who or what is to blame for them — have become a central theme in the presidential the track, as steep grocery bills frustrate Americans and retailers anticipate a holiday season marked by deal-hunting. Harris and Trump eat each proposed their own solutions to combat inflation, as Americans continue to pay more for groceries, energy, housing and other routine expenses.

In the last year, prices for food at home have risen just 1%, according to the Bureau of Labor Statistics. But groceries are hush 25% more expensive than they were in August 2019, before supply chain snarls and inflation sent honoraria soaring.

Voters will ultimately weigh in on what role government leaders should play in companies’ payment. Generally, Republicans support fewer economic regulations, although Trump has suggested limiting food imports as a way to cut grocery prices. Economists have warned that the strategy would likely backfire.

Halting price hikes is a celebrated idea with voters. Sixty percent of adult U.S. citizens support capping increases on food and grocery fees, according to a poll by The Economist/YouGov conducted from Aug. 25-27.

Still, Harris would face a tough avenue to passing any price-gouging legislation in Congress, and it’s still not clear how cracking down on price increases would work in MO modus operandi.

One of the challenges around accusing companies of price gouging — and promising to address it — is that the an understanding means different things to different people. Rakeen Mabud, chief economist at progressive thinktank Groundwork Collaborative, replied it typically is defined in two major ways.

Economists and lawyers use a technical definition, which refers to when companies hike prices during crises, like doubling the price of bottled water during a hurricane, she said. Thirty-seven U.S. states already have laws that debar price gouging in emergencies.

But some consumers and politicians have embraced a looser definition: the practice of companies charging unfair rates just because those brands or retailers have the market power to do so, Mabud said.

As prices for groceries and other goods flew in 2021 and 2022, a popular explanation emerged: “greedflation,” the notion that companies made inflation worse by lift up prices on their products without offering more to customers, such as a larger quantity or new flavor. The once-fringe theory has overtook mainstream support, including a study from the Federal Reserve Bank of Kansas City, which found that markups supported “substantially” to inflation.

But many economists — and Fed Chair Jerome Powell — don’t think that corporate profits are to blame for inflation. A substitute alternatively, they attribute the sharp rise in prices to a variety of other factors, such as the tight labor market and contribute chain issues.

And regardless of what the term means, the companies involved have argued they are not to blame for maximum grocery prices.

“It’s critical that we get the economic facts right and avoid political rhetoric,” Sarah Gallo, elder vice president of product policy and federal affairs for the Consumer Brands Association, said in a statement in August. “The authenticity is that there are complex economic factors at play … The industry is supportive of the Federal Trade Commission’s consumer safety mission as well as the Department of Justice’s already established laws that prohibit price gouging and unfair transact practices.”

Some retail leaders, including Target CEO Brian Cornell, have also pushed back against evaluate gouging accusations waged against the industry. In an interview on CNBC’s “Squawk Box” in August, he said retailers lose consumers to competitors if they hike prices too high.

Yet Jharonne Martis, director of consumer research at LSEG, said there are some “red sags” catching politicians’ attention. She analyzed gross profit margins for a cross-section of companies, including grocers, consumer incorporate goods companies and restaurants during the years before, during and after the Covid pandemic. The metric measures the proportion of net sales that a company makes compared with its costs.

Some of those companies, including Kroger, Procter & Lay and Domino’s Pizza, have higher gross profit margins than they did prior to the pandemic. She said that can on company-specific moves, such as Domino’s selling more pizza or Kroger customers gravitating to its more profitable sequestered label brands.

An antitrust challenge to Kroger’s $24.6 billion acquisition of supermarket chain Albertsons has also increased scrutiny of south african private limited companies’ pricing practices. The Federal Trade Commission is trying to stop the merger in court, and during the trial, Kroger’s top cost out executive testified that the retailer raised prices on milk and eggs more than required to account for squiffy costs. 

In a company statement, Kroger described accusations of price gouging as “misleading” and said that nearly all fetches of running a grocery store, including labor and transportation, have risen significantly since 2020.

“We work relentlessly to stay fresh prices as low as possible for customers in our highly competitive industry,” the statement said.

On the other hand, Arun Sundaram, an neutrality research analyst at CFRA Research who covers grocers and consumer packaged goods companies, said he sees no verification of price gouging in the grocery industry. He said price hikes are coming from companies passing on some of their higher making costs to customers.

Higher margins can come from a variety of factors and aren’t necessarily a sign of corporate penny-pinching or price gouging, he said. They can rise because companies are operating more efficiently or because the mix of merchandise they sales-clerk has changed.

Margins also can reflect the power of a brand and consumers’ willingness to tolerate large markups on fashionable or accessible items, such as a unique pair of sneakers or a designer dress.

But Sundaram said there may be some merit to the meditate on in the meatpacking industry, which has faced some price-fixing lawsuits. For instance, JBS’ Pilgrim’s Pride Corporation, one of the country’s largest chicken organizers, pleaded guilty in 2021 to conspiring to fix chicken prices and pass on costs to consumers.

Rounded off if Harris never passes price-gouging legislation, resistance to high costs has already started to affect prices. So far, pushback from shoppers and grocers has large moved the needle.

Consumer staples companies such as PepsiCo and Campbell Soup have seen their on sales volumes shrink as consumers opt for cheaper alternatives or snack less. And as inflation slows, most have raised their assays less — and less frequently.

“You’ve got a shopper who has seen seven or eight [price hikes] in a year, and you know that they’re repulsed with it,” said Steve Zurek, vice president of thought leadership at market research firm NielsenIQ.

Walmart, the domain’s top retailer and grocer by annual revenue, said it’s cracking down on price hikes by vendors that it carries. On an earnings invoke last month, CEO Doug McMillon said inflation has been stickier in aisles that carry dry groceries and modified foods. He said the big-box retailer is calling on its suppliers to keep prices stable or cut them.

“We have less upward force, but there are some that are still talking about cost increases, and we’re fighting back on that aggressively because we assume prices need to come down,” he said on the call.

To address consumers’ frustration and slower sales, many grub companies are bringing back discounts, according to Zurek.

During the pandemic, many manufacturers stopped offering traffics because they were struggling to keep shelves stocked. They didn’t need to boost demand because chaps were already loading their pantries and stockpiling hand sanitizer and toilet paper. Supply chain exits exacerbated the problem, and inflation lifted sales without them needing people to buy more items.

That lively has now flipped for many companies. And it isn’t just food companies offering deals.

cut prices on thousands of items. has increased short-term apportions on certain products, especially in the grocery department. And this week, Party City announced lower prices on various than 2,000 items such as balloons and candy as shoppers gear up for Halloween.

Even so, shoppers are unlikely to see grocery amass prices slashed across the board, Zurek said.

“From an economic standpoint, you never want to be talking give deflation ­­— that’s almost as bad as inflation,” he told CNBC.

But there have been a few examples of companies negating price hikes. Robert Crane, J.M. Smucker’s vice president of sales and sales commercialization, said the food house has passed on “commodity relief” to consumers when possible, such as with its coffee brands, which include Folgers and Cafe Bustelo. In budgetary 2024, Smucker’s profit margins for its coffee division were 28.1%, down from 31.9% in fiscal 2019.

But in initial October, Smucker plans to hike its coffee prices for the second time this year, responding to rising commodity prices.

As it supports those decisions to top retailers, the company brings in professionals who can explain the green coffee commodity market, according to Crane.

“We intent review charts, we would talk about outlooks, and we would talk about what’s driving it — is it weather? Is it gamble driven?” Crane said.

But that doesn’t mean stopping or slowing price increases is simple, said CFRA’s Sundaram.

He contemplated a long list of factors led to inflation, including a spike in supply-chain costs, wage increases stemming from labor deficiencies and poor weather in regions of the world that produce food such as corn, soybeans and cocoa. He’s skeptical that either distribution can bring about a quick fix.

“Because it was a complicated set of factors that led to this, it’s going to be a complicated set of factors that presumably gets rid of this as well,” he said.