If there's any price gouging in the food industry, it's deep in the supply chain where most consumers would never notice.
It’s easy to see food inflation on store shelves. It’s a lot harder figuring out who or what caused it.to address the food inflation that has been the scourge of the economy for the last three years. Grocery prices are up 21% since Joe Biden entered the White House in 2021. Wages are up only 17%. Shoppers are losing ground on their grocery budgets.
We compared average costs and profits from 2016 to 2019 with the same data from 2022 through 2024. The first period represents the pre-COVID economy, when inflation was low, while the second represents the post-COVID economy, when inflation was high.Price gouging would be evident if profits went up by a lot more than costs during the last few years. That would reveal companies raising prices more than necessary to cover their own higher costs and making more money as a result.
The biggest company in this sector is ADM, formerly known as Archer Daniels Midland, which processes agricultural commodities such as corn, stores and transports grain, and produces a variety of food additives, along with ethanol. ADM did become more profitable during recent years. From 2016 through 2019, its profit margin averaged 2.4%. That rose to 4.3% in 2022, when food inflation hit 12%. InDoes that amount to “price gouging?” Meh.
There are notable instances of food companies becoming less profitable. Restaurants are a standout. Post-COVID profits in this sector are up 8% while costs are up 50%. When McDonald’s, Chipotle, Starbucks, and other chains say they’re doing their best to limit price hikes, they have data backing them up. Other sectors representing companies such as Philip Morris, Mondelez, Kraft Heinz, and Coca-Cola also show declining profitability.
As we enter the final quarter of 2024, Americans should start thinking about their tax planning for the upcoming year. SC&H Wealth principal and wealth advisor Judy Brown joins Wealth! to discuss strategies for effective tax preparation. Brown notes that the first step is "understanding what year-end tax planning is," explaining that this process involves aligning your financial goals with the current tax laws "to find a tax-efficient way to achieve those goals.
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