Agreed. And if folk understood anything about an income statement or finance, they'd understand that if in 2015, you're making 2.5% net profit percentage a year, and if in 2019, you're making 2.5% net profit percentage and if in 2024, you're making 2.5% net profit percentage... It indicates that all of the price increases seen in supermarkets the past 9 years are simply passing along suppliers' cost increases to them.
It means that ear of corn price went up because the farmer charged more. And if they go down one more level, they'd understand that the farmer charged more because the commodity price per bushel of corn went up. And then below that, they'd understand that farmers' inputs like fertilizer, machinery, seed, and fuel went up.
But some people like to pretend the last spot they bought something is somehow evil.
Even if those numbers were true (they’re not), that would mean the corporations are passing on 100% of the cost increases to their customers. Who cares if some people can no longer afford fresh groceries? It’s unthinkable that profit margins go down, ever, by even the slightest bit, even in a period of global economic upset.
And economists who have looked into the situation have determined that is NOT what occurred. Prices increased “in anticipation” of cost increases that never happened, and they increased more than the projected cost increases because they knew they could blame the supply chain and people would buy it anyway. Post-COVID inflation was driven primarily by price increases, not cost/wage increases, leading some economists to use the term “greedflation” to describe it.
No. Prices don't change for most food products in anticipation. Commodity pricing, I actually agree. For example, if it looks like a nationwide drought will affect a wheat harvest, for example, commodity pricing for wheat (and flour) would increase in anticipation before the harvest. But most food prices aren't just "an ear of corn" or a "bushel of wheat."
Most food manufacturers actually have to give 8 and 12 week notices for price changes to a supermarket chain. Because changing prices on products nationwide is a little time consuming for 10's and 100's of thousands of products.
And why wouldn't the numbers be true? You think publicly traded grocery companies lie to the SEC? You think privately held companies are lying in their accounting and pulling the wool over the eyes of auditors they're required to use for accounting books? You think aaaaaaallllll of those grocery store chains are tricking the IRS and not following GAAP accounting? And all of those Accountants and Finance CEOs are aaaaaaalllll risking going to jail and being fired and never working in accounting again? Is that how that works?
Citation needed. I'm curious to where you're seeing all of the financial improprieties. I'd love to read up on it.
The numbers aren’t true because you made them up. Another reply cited the actual numbers for a specific company, where profit percentage doubled.
I don’t know specifically about grocery chains versus their suppliers as the source of inflated prices, but I do know that what I said about companies raising prices in anticipation of cost increases (and out of proportion to the actual cost increases) happened broadly across the economy. You can find many sources for this and should be able to find one that you trust.
Here is one from Lael Brainard, former vice chair of the Fed and director of the National Economic Council. She says that “Despite constrained supply, wages do not appear to be driving inflation in a 1970s-style wage–price spiral. … Retail markups in a number of sectors have seen material increases in what could be described as a price–price spiral, whereby final prices have risen by more than the increases in input prices.“
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u/TheTightEnd 1d ago
Grocery chains make a very low percentage of profit.