Groceries are expensive in South Carolina and North Carolina. But how to balance store profit and food security?

Food prices in Carolina region continue to soar in the face of labour shortages, the rising cost of goods and supply chain disruptions. Statistics in The Carolinas recently reported that the food inflation rate in the country has reached 7.4 per cent and that it will most rise again in the coming months. There is a strong possibility that market disturbances related to the conflict in Ukraine could push prices even higher this year. This could cause trouble for grocery retailers that have become the epicenter of food price increases.

The general inflation rate is at its highest since the nineties. This underpins serious concerns for food security as food, energy, gas and housing prices soar. When faced with skyrocketing food prices, some shoppers understandably suspect retailers of greed and taking advantage of inflation to raise prices. Skepticism of the food industry will likely increase, yet we must be careful before judging too quickly. Profit margins in the food distribution sector are generally smaller than in other sectors.

While the unease between profit and food security is not new, a company taking advantage of an inflationary windfall is still irresponsible and immoral. However, proving there is profiteering is virtually impossible, unless there is a confession admitting to participation of price fixing. Which is unlikely.

There are few in-store discounts and promotions these days and flyers seem to be getting thinner since the start of the pandemic.

The balance between profits and social responsibility remains fragile in food, compared to other types of businesses. Nonetheless, if some people believe that our retailers are making too much money, then the question must be asked: what is the acceptable threshold of profitability in food distribution? One per cent? Three per cent? Five per cent?

In order to protect consumers, some refer to retail price regulation. This strategy already applies to a few products such as milk and beer, among others. However, state intervention for thousands of products would become a veritable bureaucratic and managerial nightmare, leading to high management costs that would end up being passed on to taxpayers.

As profit-related accusations linger, the distributors could still show some empathy towards the public. There are few in-store discounts and promotions these days and flyers seem to be getting thinner since the start of the pandemic.

Grocers were subject to increased scrutiny during the pandemic, as one of the only public spaces to remain open during lockdowns. In a matter of days, they had to put protective measures in place and make the rapid switch to online retail. Actions to support struggling consumers, such as offering discounts for food nearing its best before date, will be key going forward.

The national grocers should take similar to find ways to improve affordability for consumers, who can’t catch a break otherwise. If the big chains don’t demonstrate their intention to help the consumer struggling to balance their budget due to inflation, criticism of their profits will intensify.

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Credit: The Conversation via Reuters Connect

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