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Pa. sees high grocery price inflation. Economists, senator weigh in.

A shopper fills up a cart at a grocery store.
Tom Riese
A shopper fills up a cart at a grocery store on Dec. 21.

Pennsylvania is the focus of a report on higher grocery store prices, and a Friday panel at the University of Scranton hammered home one theory on the cause.

The Commonwealth saw the highest inflation in food prices compared to other states within the last year, according to an analysis from ConsumerAffairs, a product review and news site.

The average cost of food at grocery stores in Pennsylvania went up 8.2% between November 2022 and November 2023. Vermont (7%), Maryland (7%), West Virginia (6.9%) and New Jersey (6.8%) saw similar price hikes. During the same period, the report says grocery prices increased about 3% in Colorado, which fared best in the category.

But the U.S. Bureau of Labor Statistics reports overall inflation is down from a 40-year high of 9% in June across the country.

Democratic Sen. Bob Casey issued a series of reports this fall on what he’s calling “Greedflation.” Corporate profits are to blame for the prices seen in Pennsylvania, he said. He spoke Friday at the University of Scranton during a panel on the topic.

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During a two-year period between the summer of 2020 and 2022, U.S. economic data shows corporate profits increased 75%. That's five times higher than 14% inflation over the same time period, says Casey. He’s demanding trade associations explain their price hikes and smaller packaging choices – what he calls “shrinkflation.”

“When big corporations say ‘we had to raise our prices because of inflation’ and ‘we had to raise our prices because of costs,’ that is a lie,” Casey said Friday. “It's greedflation that's driven up a lot of these costs."

Also on the panel were Lisa Durkin, CEO of the United Neighborhood Centers, Dr. Satyajit Ghosh, an economics professor at the university, and Kelly Ann Walsh, who works with elderly and infirm adults in Lackawanna County.

“There are many items we can’t buy less of,” said Dr. Ghosh, like toothpaste, toilet paper and some household food staples. “Some increase in prices can be justified, but not all.”

Durkin said the demand for food assistance is “overwhelming.” UNC doubled the number of food bags distributed — up to 41,000 — from 2022 to 2023. She’s also seen more requests for mental health resources during the past year.

Four people sit at a table.
Tom Riese
Dr. Satyajit Ghosh speaks during a food inflation panel on Dec. 22 at the University of Scranton. Also on the panel were U.S. Sen. Bob Casey (left), Lisa Durkin of the United Neighborhood Centers and Kelly Ann Walsh, a self-employed worker.

WVIA News asked economists independent of the panel to weigh in.

Yaobin Wang is an economics instructor at East Stroudsburg University. He says it’s not likely that grocery stores themselves are pulling in higher profits due to higher prices.

“As consumers, we notice that price has been increased significantly in recent years,” Wang said. “But as a supplier, as the stores, they must have also noticed that their costs of providing those goods has been increased.”

Consumers may be looking for alternatives while out shopping, Wang noted, but separate stores may share similar prices.

Mica Kurtz, associate professor of economics at Lycoming College, said comparing Pennsylvania to Colorado in the ConsumerAffairs report over one year might not show the whole picture.

Pennsylvania grocery prices could be simply catching up with states that saw increases in pre-pandemic years. Another factor, he said, could be the difference in wages between the states.

“When unemployment is low, it’s harder to find workers and wages tend to rise,” Kurtz said. Pennsylvania and Colorado have similar unemployment rates, just below the 3.7% national average.

Pennsylvania’s minimum wage is still the same as the 2009 minimum set at the federal level, $7.25. Colorado’s minimum wage will increase to $14.42 on Jan. 1, 2024.

Could some grocery stores need to increase their prices to attract workers with more desirable wages? Kurtz said it’s hard to tell, but an interesting question to consider.

And wages haven’t exactly kept up with overall inflation, said Matias Vernengo, economics professor at Bucknell University.

“You may not be happy if your wages are not going up at the same pace, but at the end of the day, it’s a lower [national] inflation level,” Vernengo said.

Corporations having power is nothing new, he said, so he hesitated to say recent price increases are due to corporate greed. The biggest effects on grocery prices? The shock to the economy from the pandemic and the war in Ukraine are likely still having ripple effects.

“There are other issues — inequality is high, people are afraid they’re going to lose their jobs if there’s a recession,” he said. “But overall inflation is relatively low and unemployment is relatively low.”

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Tom Riese | WVIA News