Bloomberg via Yahoo said:
In a March email to his bosses, Andy Groff, Kroger’s senior director for pricing, acknowledged that the company had raised its prices more than required to adjust for higher costs.
“On milk and eggs, retail inflation has been significantly higher than cost inflation,” Groff wrote.
I don't see anything wrong with that. Prices are not set as "cost+x", but are determined by supply and demand. If market prices rise faster than cost, profit margins increase. If market prices rise slower than cost (or even fall) the profit margins shrink. The alternative is to sell below market price which not only leaves money on the table, but also can lead to shortages.
Let's say you sell widgets for $15 and buy them from the manufacturer for $10. You still have a bunch in your warehouse, but the factory had a fire and there is a shortage on the market, resulting in widgets going for $18. You will sell them for the market price (or maybe $17 to undercut competition and increase market share) and your profit margin will rise.
Alternatively, let's say a competitor comes out with their version of widget and the demand for yours falls. Now the market price is $12 and you just about break even given other costs of your business. The market giveth, and the market taketh away.
Sure you might want to eat eggs more often but you're likely not. Your likely going to eat the same amount of eggs and drink the same amount of milk from one week to the next.
Ok, how about this. You want to eat the same number of eggs and drink the same amount of milk. But there is a shortage (avian flu for eggs for example) and prices rise. You may cut down on eggs and milk. But if you get a stimulus check, or expanded unemployment payment of extra $600 per week from the government, you are more likely to not reduce your consumption. Thus the prices increase more than they would without these government payments.
To pretend all this government spending was not inflationary is childish.
When Kroger's senior director of pricing comes out and spews about the disequilibrium of pricing being an honest mistake, I'll give your statement some credence.
Why do you keep repeating "honest mistake" as a mantra? Kroger did not cause the disequilibrium. Supply chain issues and government spending caused the disequilibrium. Kroger (and other grocery stores) merely allowed equilibrium between supply and demand to reestablish itself at a higher price point rather than allowing this disequilibrium to persist.
Until then, I'll assume Kroger's senior director of pricing is thinking first and foremost about his job performance in the eyes of his boss and that he is not only covering his butt ensuring he is not behind the eight ball on pricing but seeing an opportunity to put up some good numbers for that job performance evaluation.
Obviously Kroger is a for-profit company that will not keep prices lower than market price just for funsies. Management is responsible to the owners, i.e. stockholders. Just like Big Labor bosses are responsible to their membership and seek to maximize their pay and benefits.
I wonder if you have ever worked within a large organization and observed how upper management/leaders respond to situations. Job one is cover your ass.
Sure, but what does that have to do with our discussion here?
You seem to discount greed as human nature.
No, I am not. Quite the contrary. But I acknowledge that it is omnipresent. All market actors, not just businesses, want to maximize the benefit to themselves. When that desire is deemed excessive, rightly or wrongly, it is called "greed". But it is not fundamentally different than the desire of labor or consumers to maximize their benefit. Greed is not something that started in 2021 either. The title of this thread is "greedflation" - it is an attempt to claim that the chief cause of 2021-2023 high inflation was corporate greed and to discount government spending. Note that the people who pushed "greedflation" narrative also were (and are) in favor of increased government spending like the $3.5T B
3 (aka Spendapalooza) and therefore have a vested interest in discounting government spending as a contributing factor to high inflation. Note that Kamala Harris will most certainly seek to resurrect B
3, likely with an even higher price tag. After all, she is already proposing much higher child tax credits than even Biden did.
And rank and file Boeing employees is a terrible example.
The Boeing machinists have rejected a 25% pay increase offer and are striking demanding 40%. And this when Boeing is not doing well. In fact, Boeing stock price dropped almost 40% since the beginning of the year.
Is this not a form of greed?
I see your point in your final statement but I still think there would be greater price disparity the more processed food becomes. Perhaps there is. Perhaps it's just not scrutinized as closely.
The more processed a food is, the less it should be affected by swings in the supply of original foodstuffs. Eggs are pretty much eggs in a cardboard or styrofoam container. When supply of eggs is disrupted it affects consumer prices with little cushioning. Some processed egg product has more cost inputs, so price of eggs themselves is a lower % of the retail price. It can also be stored longer than fresh eggs, which also dampens fluctuations.
One other thing to consider is the lead-up times. If a lot of hens die or have to be culled, you have to raise more to increase supply of eggs. Which takes time - you can't increase supply overnight.
Some things have longer lead-up times than others. For example, it takes years for Christmas trees to grow to 6' (a popular size for homes) and even longer for taller trees for McMansions, company lobbies or outdoor spaces. Decisions made during the 2008 recession had effects years later.
Why are fewer Christmas trees growing in the US? Blame the Great Recession
