Politicians routinely pander to voters with ideas that sound appealing but are harmful in practice. The reflexive vow to impose price controls to stop those greedy corporations from gouging consumers with high prices exemplifies this type of poor policy. Yet in one of her first policy proposals as the Democratic Party’s White House candidate, Kamala Harris insisted that the country needs “the first-ever federal ban on price gouging on food and groceries.” She would set “clear rules of the road to make clear that big corporations can’t unfairly exploit consumers to run up excessive corporate profits on food and groceries.”
While these accusations are vague, they still clearly do not apply to the grocery business. In 2022 when inflation was peaking, the average profit margin for a grocery store was 2.3%. Not only was this profit margin lower than 2021 (2.9%) but it is also well below the average business profit margin between 8 and 9%. Making the exploitation argument even weirder, profit margins fell further to 1.6% in 2023.
