Overview of Make groceries cheap again
This episode of Today, Explained (Vox) examines why grocery bills have become so painful for many Americans and argues that the culprit is not just supermarkets. The conversation looks at how food prices are shaped by the broader supply chain—especially processors, meatpackers, manufacturers, and distributors—and explores two possible policy responses: stronger action against concentrated food-industry power and a temporary, targeted price cap on essential groceries.
Why grocery prices feel so bad
- Grocery prices have risen faster than wages since the pandemic, making everyday food shopping feel much less affordable.
- The episode notes that grocery inflation has been especially salient because people see these prices constantly, unlike many other costs.
- A key framing point: affordability is not just about prices in isolation, but about prices relative to wages.
What is actually driving prices up
It’s not mainly the grocery store
- The common assumption is that supermarkets are the ones jacking up prices.
- But grocery stores generally operate on very thin margins:
- Typical grocery-store profit margins are around 1%–3%
- By contrast, some middle parts of the supply chain make much higher margins
The real money is often in the middle of the chain
The food system is described as a chain with several layers:
- Farmers
- Food processors and meatpackers
- Food manufacturers
- Distributors
- Grocery stores
The episode argues that a large share of food costs comes from the non-grocery parts of this chain, and that those middle layers are where a lot of profit is made.
Examples of windfall profits
- Tyson saw beef-packing profits more than triple from 2019 to 2021 during pandemic-era slaughterhouse disruptions.
- Bunge and other commodities traders saw profits nearly quadruple from 2019 to 2023 amid global supply disruptions, including the Russia-Ukraine war.
Why small stores are more expensive
- Large chains like Walmart, Costco, Amazon, and Kroger have significant bargaining power with suppliers.
- Smaller grocery stores do not have the same leverage, so they often pay more for the same products.
- A cited study found that staple foods at small stores were often 10%–54% more expensive than at nearby supermarkets.
Policy ideas discussed
1. Crack down on concentration in the food supply chain
- One response is to go after excessive market power among middlemen and suppliers.
- The hosts note, however, that this approach can take a long time and savings may not reliably reach consumers quickly.
2. A temporary, voluntary price cap on essentials
Jared Bernstein discusses a proposal from the Center for American Progress:
- Create a temporary cap on a basket of essential grocery items:
- eggs
- bread
- rice
- fruit
- milk
- similar staples
- Participation would be voluntary for grocers.
- The government would offer incentives, especially:
- caps on credit card swipe fees, which average around 2% of each transaction and are a major grocery expense after labor
How this would work
- Stores that opt in would agree to hold prices on that basket roughly steady for a period of time.
- The idea is to give shoppers predictable relief without broadly disrupting price signals across the whole economy.
Limits and skepticism
- Bernstein acknowledges that government intervention in prices makes many people nervous because of fears about distorting markets.
- He cites rent control as an example of a policy that can create unintended consequences.
- He also emphasizes that presidents and lawmakers have very little direct control over grocery prices in general.
Main takeaway
The episode’s central argument is that grocery affordability is a real problem, but it’s often misdiagnosed. Supermarkets are not the main villains; much of the pricing pressure comes from concentrated power in the middle of the food supply chain. Still, the show suggests there may be short-term policy tools—like targeted price caps and fee relief—that could provide some immediate help while broader structural reforms work in the background.
Notable insight
- Grocery inflation was reportedly near flat from 2015 to 2019, then rose about 25% after the pandemic.
- That sudden jump helps explain why consumers feel such a sharp sense of sticker shock: people had little time to adjust.
Credits and context
- Guest: Jared Bernstein, economist and former chair of President Biden’s Council of Economic Advisers
- Reported/summarized around the theme of grocery affordability and inflation
- Produced by the Today, Explained team at Vox