BUSTED! Kroger, Grocery Conglomerates Called Out for Gouging Customers

Grocery conglomerate Kroger admitted to increasing prices on milk and eggs, essential items for families, more than inflation. Kroger’s admission came during an anti-trust trial and just months after the Federal Trade Commission (FTC) questioned whether COVID-19 price increases at grocery conglomerates, including corporate mega-stores, were necessary and if the continued higher prices were all about increasing profits.

“Now that Kroger has finally been forced to tell the truth about increasing prices unnecessarily on consumers, it is crystal clear why corporate mega-stores have been so determined to shift the blame for their bad behavior,” said Electronic Payments Coalition Executive Chairman Richard Hunt. “Maybe now the truth is out, they can finally stop the charade and admit their price increases never had anything to do with credit card processing at all.”

Economists told Newsweek, “the grocery sector, which is composed of only a few chains like Kroger and Walmart, was benefiting from supply chain disruptions during the pandemic, allowing the companies to hike prices beyond what was necessary to retain profits.” And Alex Beene, an instructor at the University of Tennessee at Martin said, the admission from Kroger’s Senior Director for Pricing Andy Groff calls “into question the explanations Americans have been given for the last three years on inflation … Supply chain issues, rising shipping costs, and increased wages certainly played their part in the higher prices we’re currently seeing. However, the admission some prices were elevated simply because businesses knew they could doesn’t help the case for those arguing price gouging isn’t an issue.”

Credit card processing costs, known as interchange, have stayed relatively flat for nearly a decade at less than 2% and grocery stores pay among the lowest processing costs. When corporate mega-stores cite increases in processing costs, they are either willfully trying to mislead or lack a basic understanding of math.

According to the Federal Reserve Bank of St. Louis, a gallon of whole milk retailed for $3.04 in August 2019. At a 1.8% interchange rate, the processing costs for that gallon of milk would be roughly 5 cents. A gallon of milk last month cost about $4.00, meaning at the same 1.8% interchange, interchange would be about 7 cents.

The only reason a grocery conglomerate pays more in interchange is because they increased prices on essential items for American families.

A new EPC one-pager copied below examines how grocery conglomerates have raised prices on consumers and shows the steady rate of card processing costs against the increase in Americans’ grocery bills.