Pundits keep chirping about how voters want President Joe Biden to do something to bring prices down, particularly at the grocery store.
Biden defenders claim that a president has few powers at their disposal to make essential goods like food cheaper. Levers that politicians can potentially pull — remember wage and price controls in the early 1970s? — tend to do more harm than good.
Here’s the thing, though. Consumers, acting collectively, do have the power to force companies to charge less. And they’re exercising that authority now in ways that have grabbed corporate America’s attention.
Target, Walmart and Aldi, among others, are cutting prices on thousands of food items, including name brands, and in some cases trumpeting the lower charges in press releases. Consumers haven’t been sitting idly by, waiting for big-box stores to act. Shoppers increasingly are shunning the name brands they used to buy at their local grocery stores in favor of cheaper private-label alternatives. Last year, 22% of sales at grocers were for private-label offerings, the highest share ever recorded, according to the Wall Street Journal.
That percentage is likely only to increase this year, at least judging by the comments of food-company CEOs, who say they’re struggling to maintain sales of their name brands following several years of price hikes that have touched off the consumer revolt. The risk for those name-brand companies goes well beyond a few quarters of soft sales. Food shopping is a habitual practice. Once a consumer decides the private-label version tastes just as good as an official Oreo, it’s a struggle to win them back. And in most cases, they do.
There are few areas of our economy more competitive than food. The profit margins at grocers always have been notoriously thin. Some companies undoubtedly took more than full advantage of their newfound pricing power following the pandemic and the supply-chain disruptions that kicked off this inflationary era. They’re getting their comeuppance now, it appears, and are responding accordingly.
All of this is to say that the good old competitive market is far more effective at taming inflation than any politician, no matter how powerful or popular, ever can be. It’s encouraging to see the beginnings of a price correction that we hope will make everyday Americans’ lives easier.
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