What Exactly is Greedflation?

Greedflation refers to the practice of leveraging inflation as a justification for significantly increased profits. This concept tends to spark debate.

To understand how it operates, let’s consider the economic principle of “customer markets.” Typically, businesses are hesitant to raise prices due to potential backlash from consumers. However, when they sense an opportunity—often after prolonged periods of suppressed profit margins—they may raise prices under the guise of compensating for past and anticipated future costs.

This phenomenon can lead to price hikes that exceed what many might expect. Furthermore, numerous sectors, particularly agriculture, are heavily influenced by fluctuating energy costs. When these expenses rise, it is inevitable that food prices will follow suit.

As I browsed through my weekly grocery store flyer, I stumbled upon a shocking price:

This is NOT a promotional offer! I’ve tried to remain relatively calm about grocery prices, but this is outrageous. While I acknowledge that soda isn’t the healthiest choice, it’s a personal indulgence, and I limit my consumption. I adore Dr Pepper, but I refuse to pay $8.79 for a mere 12-pack.

I then checked a competitor's flyer, where they priced the same product at just $4 for 12 cans. Why such a stark difference? It’s simply because they can get away with it, exploiting consumer behavior to push inflated prices.

Egg prices are another example of this troubling trend. The recent surge in egg costs has been linked to the mass culling of chickens to control the spread of bird flu, as well as rising production costs due to inflation. Interestingly, despite 43 million of the 58 million birds slaughtered being egg-layers, the total flock size has only decreased by about 5-6% from the typical 320 million hens.

Recent government data revealed that the average retail price for a dozen eggs soared to $4.25 in December, up from just $1.79 the previous year.

Video Description: This video discusses the impact of greedflation on grocery prices and whether price gouging is driving these increases.

Section 1.1: The Egg Price Crisis

With egg prices more than doubling over the past year, there are increasing demands for investigations into potential price gouging.

According to CNBC, a recent Supermarket Inflation Tracker indicated that store-brand items have experienced a higher inflation rate than branded products. For instance, in the three months leading to December 2022, own-brand items surged by 18.3%, while branded items rose by only 12.3%.

Reena Sewraz, the retail editor at Which?, noted that despite consumers opting for budget-friendly store brands to cope with the rising cost of living, these items have faced steeper price increases compared to their premium counterparts.

The store I’m referring to is Giant Eagle, where I used to be a loyal customer. Not anymore!

Section 1.2: Strategies for Saving Money

So, what can consumers do to navigate these inflated prices? Here are some effective strategies I have been employing:

• Shop at local grocery stores, Target, Aldi, Sam’s Club, Costco, and farmer’s markets.
• Review advertisements in advance. As illustrated by the Dr Pepper example, prices can vary significantly.
• Plan to grow your own food in the upcoming spring.
• Take advantage of post-holiday clearance sales, such as after Valentine’s Day or Easter, for discounted holiday items.
• Use coupons and rewards programs to lower costs.
• Some may perceive Costco as pricey, but I’ve found their clearance items on food and household goods to be fantastic deals. Join a Costco fan group to discover amazing finds.
• Consider baking your own favorites, like bread, as bakery prices have also surged.
• Make an effort to use leftovers effectively. Although I often overlook this, I try to cook extra ground beef and freeze portions for future meals, like adding it to spaghetti sauce.

Video Description: This video examines the various factors contributing to grocery store price increases, including greedflation.