The Tribune

With CHARLIE HARPER

HOW’S your grocery bill these days? Still uncomfortably high? How can that be? We keep reading that inflation is down in the US. Many of the problems that drove prices through the roof so far during this decade seem to have either been solved or simply subsided as the world’s economy tries to stabilise after the worst of COVID-19 settles firmly into the rearview mirror. What’s going on?

A woman in the supermarket this week had an easy explanation. “What’s going on?” she repeated the question with an arched eyebrow. “I’ll tell you what’s going on. The grocery stores, all the transportation people and various middlemen, even the farmers and the ranchers in the US, they’re not going to give our money back in the form of lower prices.

“They’re going to keep their higher income. They want a better life for their families just like we all do. We’re just going to have to live with it.”

Maybe this lady seems a bit cynical. But is she wrong?

As February turns into March, it’s clear that in the US, Americans are talking less about inflation. Prices for gasoline and used cars have dropped over the past year. But prices for groceries haven’t declined. Naturally we feel that pinch here, too.

US government data shows that grocery prices have risen by 25 percent over the past four years. According to that same data, the overall inflation rate in the US economy has been measured at 19 percent during that same period. And now inflation is receding into the recent past while the grocery bill stays high.

The US Department of Labour Statistics reports particularly painful price increases for beef, baby food, sugar and bread, among other items. Prices for milk and eggs have declined, so the news isn’t all bad. But younger and lower-income families spend 31 percent of their income on food, compared with roughly 8 percent for wealthier ones, so baby food and bread prices will hurt them especially hard.

But why is this happening? According to a recent analysis in the Washington Post, grocery prices remain elevated due to a mixture of several factors. These include hangover labour shortages resulting from the COVID-19 pandemic; ongoing, persistent though reduced supply chain disruption; droughts in several regions around the world; the ongoing war in Ukraine; avian flu outbreaks in the US, and other factors seemingly far beyond the control of worried planners and economists in Washington.

There’s another factor. Consolidation in the supermarket industry in recent years means large chains have the ability to keep prices high, according to government economic policy experts who have been trying to explain stubborn high grocery prices to reporters.

One example of growing government concern over this merger trend came this week when the US Federal Trade Commission filed a formal objection to a proposed takeover of the Albertsons supermarket chain by Kroger. Albertsons was a major grocer in Florida from 1974 until they sold most of their stores to Publix 16 years ago. The chain now operates west of the Mississippi River, mostly in California.

But this company is still one of the largest supermarket chains in North America, so the anti-trust implications of the proposed merger are apparent.  Albertsons has been ranked 53rd in the 2018 Fortune 500 list of the largest United States corporations by total revenue in recent surveys.

“Kroger’s acquisition of Albertsons would lead to additional grocery price hikes for everyday goods, further exacerbating the financial strain consumers across the country face today,” said Henry Liu, director of the FTC’s Bureau of Competition. “Essential grocery store workers would also suffer under this deal, facing the threat of their wages dwindling, benefits diminishing, and their working conditions deteriorating.”

Will grocery prices decline anytime soon in the US? Maybe not. The lady in the supermarket might be right.

“I think people are waiting for prices to return to what they call ‘normal’ — and with the exception of a few things, like eggs — we’re not going to see that. We’re going to see prices stabilize, and that’s likely about all there is to it,” said Dawn Thilmany, an agricultural economist and professor at Colorado State University in speaking with reporters. Customers need to deal with it.”

And those high grocery prices will remain a big worry for Americans. According to a November 2023 survey by Yahoo Finance/Ipsos, concern about food costs concerns Americans by much more – 50 percent – than any other surveyed issue.

Gas prices are also a continuing concern, despite overall price stabilisation. While they have declined since the worst of the pandemic years, CBS News reported that there is a lot of volatility in the Florida retail gasoline market of most concern to us in The Bahamas.

CBS reported that according to the American Automobile Association, two weeks ago the Florida state average jumped by 21 cents per gallon. Then last week, the state average fell 5 cents, before jumping another 8 cents. By mid-week, the state average reached a new 2024 high of $3.37 per gallon, before falling another 5 cents. Gas prices in Florida have had more bounces than a yo-yo.

Last year’s high was $3.85 per gallon.

“The recent (gasoline prices) increases are attributed to rising oil prices, as refineries conduct seasonal maintenance,” said AAA spokesman Mark Jenkins. “Florida’s gas prices are likely to face continued upward pressure through the next month as the presence of winter residents and spring breakers contributes to strong fuel demand.”

Here’s some context for gas prices, courtesy of the US Energy Information Administration: In Florida, the yearly average price at the pump was $1.66/gallon in 2004; $3.35 in 2014; $2.35 in 2020; $2.44 in 2021; a whopping $3.40 in 2022; $3.30 in 2023, and $3.19 so far this year. They have doubled in the past 20 years.

Food and gas. Big expense items for most people. And not much relief in sight in the near future. Sigh.

Biden may benefit if voters despise Trump more

Stubbornly high food prices and voter concern about them has remained a steady source of material for television pundits during the current US political campaign. This is a problem for Joe Biden, since he is the incumbent president and the current state of the US, whether good or bad, is his record to defend.

Donald Trump, when his many court appearances don’t keep him off the campaign trail, advocates policies like resuming a tariff war with China that will drive up prices all over the US economy. But at this point, no one seems to care. High food prices are Biden’s fault.

And as analysts continue to predict a close November presidential election race that will likely be decided in a handful of “swing states”, everyone is looking for a particular factor that will determine the race. The New York Times came up with a doozy this week. Here’s the gist of their theory.

Biden may be poised to benefit from an almost paradoxical situation, given his current low popularity ratings. And ironically, the previous beneficiary of just such a situation was Donald Trump, eight years ago.

As was consistently the case with Trump in 2016, the polls show that a clear majority of voters do not believe Biden is an effective president. Partly as a result, he faces potential defections from Democratic-leaning constituencies. Much is made of this in the media.

So far, polls show Trump leads because he’s appealing to young, black and Hispanic voters relatively better than he did four years ago. But here’s the heart of this theory: Just as Hillary Clinton was not a great fit for the Republican-leaning voters who were unconvinced by Trump in 2016, Trump is hardly the ideal candidate to win over these disaffected Democratic voters. It’s clear they don’t like Biden, but will they really vote for Trump? That seems unlikely.

So what does the past teach us about the present? Trump was seen as unfit for the presidency in 2016, but won anyway. Voters may have had deep reservations about Trump, but many Republicans ultimately voted for him against hated Democrat Hillary Clinton. This time around, Biden will hope Dems’ intense dislike of his own opponent will work for him in the same way.

It’s not ideal if you win because voters despise your opponent more than you. But Biden would take it.