By Peter A. Coclanis
Though cynics may question her motives, Kamala Harris’ recent call to ban price gouging on groceries has received a lot of attention – and for good reason.
The cost of food has been a big concern for Americans since the height of the COVID-19 pandemic, with U.S. food prices rising 25% between 2019 and 2023. While U.S. food inflation slowed considerably in 2024, grocery prices are still up from prepandemic numbers.
Price hikes like this are as painful as they are aggravating, and they can have real effects on both household spending and the broader economy. So it’s not surprising that the topic is coming up on the campaign trail.
But oftentimes, complexity can get lost amid the politicking. Here, economic history – and economic historians like me – can provide some context.
How Americans spend their food dollars
For starters, despite the run-up in food prices in the U.S., there’s little evidence of price gouging in the grocery industry today.
“Price gouging” is notoriously difficult to define, but the term is usually invoked after a supply or demand shock of some kind, when sellers are said to take advantage and jack up prices, particularly for basics such as food or gasoline. Concern over “gouging” goes way back – in some ways, it can be seen as an outgrowth of medieval Christian injunctions against mercantile greed.
Although many states have laws on the books against price gouging, such laws have proved difficult to enforce. In the case of the U.S. grocery industry, profit margins — traditionally razor-thin at about 1% or 2% — remain small even today.
What’s more, it’s important to note that food prices in the U.S. — relatively speaking — are the cheapest in the world, and have been for a long time. This is the case whether measured in terms of disposable personal income or in terms of percentage of household expenditures.
For example, U.S. Department of Agriculture data shows that in 2023 — the most recent year for which data are available — Americans spent about 11.2% of their disposable personal income – or income after taxes – on food. That was unchanged from 2022.
This includes expenditures for both food at home — generally purchased at supermarkets and other grocery stores — and food purchased “away” at restaurants and the like. Interestingly, the “away” component has been growing as a proportion of total food spending since the onset of COVID-19.
Grocery prices around the world
No one likes to pay more for food, but a little comparative data can reduce one’s sense of victimization, if not alleviate the pocketbook pain.
Cross-national data compiled by the USDA shows that in 2022, Americans spent less on food as a proportion of total consumer expenditures than people in any other country. People in many other nations spent two, three or four times as much in percentage terms, and sometimes even more.
The differences were greatest between the U.S. and low-income countries in South Asia and Africa – Bangladesh, Myanmar and Ethiopia, for example – but were also quite sizable between the U.S. and middle-income countries such as Argentina, Brazil, China, Costa Rica and Mexico.
These differences aren’t altogether surprising. Why not? Because as the German statistician Ernst Engel first noted in the middle of the 19th century, as family or household income increases, the proportion of the total spent on food declines. After all, you can only eat so much no matter how rich you are.
Scholars have found that Engel’s insight still applies in the contemporary world, which provides context for the sharp distinctions between low-income and middle-income countries and the U.S.
That said, however, there are big differences between the U.S. and other high-income countries such as Japan, Sweden, Norway, France and Italy, with the U.S. percentage spent on food considerably lower than in any of these other rich countries. This is because economies of scale are more important in American agriculture, among other reasons.
To be sure, if so inclined, one can point to certain negative environmental externalities in American food production and question the ways animals and laborers are treated in the American food system, which prizes efficiency — or at least low prices — above all else.
But food that is dirt cheap in comparative terms, even in a time of rising food prices, is a problem virtually every other nation in the world would love to have.
Peter A. Coclanis is Professor of History and Director of the Global Research Institute at the University of North Carolina at Chapel Hill.
The Conversation arose out of deep-seated concerns for the fading quality of our public discourse and recognition of the vital role that academic experts could play in the public arena. Information has always been essential to democracy. It’s a societal good, like clean water. But many now find it difficult to put their trust in the media and experts who have spent years researching a topic. Instead, they listen to those who have the loudest voices. Those uninformed views are amplified by social media networks that reward those who spark outrage instead of insight or thoughtful discussion. The Conversation seeks to be part of the solution to this problem, to raise up the voices of true experts and to make their knowledge available to everyone. The Conversation publishes nightly at 9 p.m. on FlaglerLive.
Atwp says
Good article.
The Sour Kraut says
Just look at the increase in profit margins of the largest food producers in the U.S. They are publicly traded companies so the information is made public.
Lisa says
I’ve read this article 3 times and I’m still a little confused by it. I cannot agree with my GROCERY BILL BEING THE CHEAPEST IN THE WORLD. First I really don’t care about what the price of food is in another country. I live in the United States of America and my food bill is not cheap or wait I may be lying because it really depends on what I’m buying and where I’m buying it from. The picture shown is Target, I stopped shopping at Target long ago when I found some of their items cheaper at another store. And now that other store is creeping up. A side note, my children love pizza we have (had) pizza night once a week not for nothing but the Pizza place we’ve ordered from for the past year or so just increased their prices. Not .25cents or .50cents but most if not all items on the menu were increased $2.25 sorry but really???????? So now when I go to Walmart cause Walmart is just about the only place I can shop in I buy frozen pizza and that’s pizza night for us. By the way I am not poor I’m on a budget like most folks but with the utility bill increasing, the electric bill increasing, our taxes increasing and taking care of my children’s needs because not only the food prices increasing clothing, shoes etc are increasing. I can continue but I will end it here cause it’s just my opinion and personal experience.
Ray W, says
Hello Lisa.
It is cheapest both by percentage of “household expenditures” and by percentage of “disposable income”, not by overall income. The two categories are commonplace in economics and can be used for comparison purposes, as they are here.
DaleL says
I’m old enough to remember 1978 to 1982. Inflation over those four years was 48%! With the COVID pandemic and stimulus money from both Trump and Biden, there has been a spike in inflation. Prices from 2020 to 2024 have risen 21%.
Publix sells pizza dough, both in a ball and already rolled out. A jar of pizza sauce, some pepperoni, a little onion, and pizza cheese will add to the cost. Still, the pizza will be fresh, tasty, and less expensive than frozen.
I love living in a country that is metaphorically the “shining city upon a hill”. People want to come to our country, whether we like it or not. Imagine living in a country that people desperately want to leave.
Whiplash says
This person totally personifies the saying that: “Those who can “DO” and those who can’t do, TEACH”!
He has no idea what he is talking about! We are paying almost 30% more for food and wants us to be grateful that food is cheaper than it is in other countries!
I started as a bagger for Albertsons Stores and retired as Counsel and Director of Government and Public Affairs and can tell you that supermarket profits over my 36 years have always been in the 1% to no more than 35. Most years they were under 2 1/2% where they remain today! There is no price gouging going on or as MS Harris says, Gauging!
Ray W, says
Hello Whiplash.
I am not saying you are wrong in your conclusions. I, too, grew up reading about tight profit margins in the grocery business. But I looked up Publix’s sales and net earnings for 2022 and 2023.
In 2023, Publix’s sales were $57.1bn, up 4.7% over 2022, when sales were $54.5bn.
In 2023, Publix’s net earnings were $4.3bn, up 49% from 2022’s $2.9bn.
Make of this what you will. Me? I don’t claim to be an economics scholar. At best, I am a curious student.
Maybe a net earnings figure that is 7.5% of Publix’s overall sales equates to a net profit margin. Maybe not. That net earnings increased by 49% when sales increased by 4.7% is interesting.
I looked for definitions. Net earnings are considered synonymous with net profits. However, I did find a definition that had net income as the last line item on an income statement, meaning net income is after taxes had been deducted. That definition held that net income and net earnings are the same. If that is so, Publix’s net earnings likely were $4.3bn after taxes had been deducted and the 7.5% figure is the actual profit margin.
It may well be that Albertson’s in your 36-year career never engaged in price gouging. The jury is out on Publix. You comment that you never saw anything above 3.5% net earnings in your 36 years. It looks like Publix saw 7.5% last year.
protonbeam says
Why does Flagler Live keep rerunning articles by this hack? Most are intellectually incoherent and provide anecdotal or falsely comparative information to what purpose I am not sure – why are we comparing food prices in countries who may rely on imports or whose GDP or income levels are not comparable or whose cultures, laws, rules and tax structures are vastly different.
The author attempts to intermingle socio economic and other factors and tosses in Nigeria – as of TODAY in Nigeria you can get a loaf of bread for $1.37 US and a dozen eggs for $2.01 – again not sure what were comparing – or I guess this authors approach of “well its isn’t so bad” “look over here while I distract you” – then by his logic what are LBGQT activists complaining about – its “not so bad here in the US” I mean in two of the countries in his chart they will kill or imprison you for being LBGQT ) Nigeria being one – so apparently were just fine here at home.
This article felt like a scolding to those who rightfully complain about food price escalation in an effort to blame everyone and everything in the world except the terrible leadership herein the US that got us here.
Ray W, says
Your comment presumes that you are “rightfully” complaining. Maybe you are. Maybe you are not. You might be wandering through life fooling yourself. Your own argument presents as intellectually incoherent. Was that intentional on your part or are you so innumerate that you don’t understand the premise of the article?
The author states that he used USDA compiled “cross-national” data for his comparisons, not his own data. Did you miss that part? Nations all over the world gather standardized economic data so that they can better understand what is happening both at home and abroad.
USDA data shows that Americans now spend a lower percentage of both their “disposable income” and “household expenditures” than do citizens of any other country.
And I recently posted a comment based on a different article that detailed the quantifiable fact that overall wages have finally caught up to and passed Trudenflation in this country. That article said basically the same thing.
As a percentage of national income, we now spend on average less on food than we did in 2019. Some of us likely do spend more (you might be one of them), but on average we spend less as a percentage of our wages.
Kim says
This article is so skewed as to be preposterous. It appears to simply provide data to support the author’s view. Of all of the countries listed in the chart, the U.S. is by far the highest average income country ($80K per year average), with the closest of those in the chart being Germany at $62K, a distant second. These referenced figures are from OECD data for 2023. So, of course, “as a percentage of household expenditures”, the percentages would be higher for all the other countries. Their income is substantially lower than ours (and remember this is also skewed for us since we have a larger portion of billionaires and millionaires when compared to most of these other countries). Just over 50% of U.S. household earned less than $75K in 2023 per Statista.
I am fortunate enough to have traveled extensively in Europe within the last year. I found it shocking how much lower food prices (both groceries and restaurants) were, compared to ours. I have traveled to Europe for business my entire adult life and have never seen such a wide price discrepancy. In fact, Europe used to be substantially more expensive than us. And, I was not in particularly touristy locations. So, I think this would require a deeper look. If, as the author suggests, we prize efficiency, we should have even lower prices. Checking profits within the food supply chain would be a better check on whether there is “price gouging” going on or not. I could go on, but I’ll stop.
Ray W, says
Are you calling USDA “cross-national” statistics preposterous? How do so many FlaglerLive commenters miss this most basic premise of the article? Did none of you click on the link the author provided?
I went to the USDA site. Its National Agricultural Statistics Services (NASS) has been collecting international agricultural economic data since just after WWII. The agency has been collecting national agricultural data for about 150 years.
In 1961, NASS was reorganized to take on data collection previously performed by another federal agency. NASS now publishes just under 500 national reports each year.
Kim says
Ray, I did not say the statistics from USDA were preposterous. And, yes, I went to the link. I said the article itself is so skewed it’s preposterous. Logically, a country with 25% lower average income is probably going to spend more on food as a percentage of that income, just as people in our country with a 25% lower income will. Please don’t assume that people don’t read just because they don’t agree with your viewpoint. I didn’t miss the premise of the article. I think it’s a flawed premise, as it’s incomplete.
Land of no turn signals says says
Much cheaper 4 years ago.Just saying
Nephew Of Uncle Sam says
You also had a pandemic and everyone was staying home.
JOSEPH HEMPFLING says
Sure they may be the cheapest according to what standard you use, and there are many, but they are not “food” in the healthiest sense but merely “food-like” substances, and come off an assembly line hence all the obesity and diseases we are suffering from as a result. Profits is the name of the game and damn the results including you and me. Not to mention the chemicals many of which are banned already in the u.K.
So if you really want to calculate the cost of our food, include health care costs. And you will get a new number, a more real one and a much much higher one !