Although cynics might query their motivesKamala Harris' recent call to Ban food price gouging has received plenty of attention – and for good reason.
Food costs have been a serious concern for Americans because the height of the COVID-19 pandemic with food prices within the United States Increase by 25% between 2019 and 2023. As food inflation rises within the US slowed down considerably In 2024, food prices are still above pre-pandemic numbers.
Price increases like these are as painful as they’re aggravating, and might have real impacts on each household spending and the broader economy. It is subsequently not surprising that the difficulty is being raised within the election campaign.
But the complexity is commonly lost within the political debate. Here economic history – and economic historian like me – can provide some context.
How Americans spend their food money
First of all: Despite the rise in food prices within the USA There is hardly any evidence today's price gouging within the food industry.
“Price gouging” is notoriously difficult to define, however the term is normally used after a supply or demand shock of some sort, when sellers supposedly make the most and lift prices, particularly on staples like groceries or gasoline. Concerns about “gouging” return a great distance – in some ways it could possibly be seen because of this of medieval Christian precepts against industrial greed.
Although Many states have laws in effect In the fight against price gouging, such laws have proven difficult to implement. In the case of the US food industry, profit margins – traditionally razor-thin at around 1% or 2% – are still slim today.
Additionally, it is vital to notice that food prices within the US are – relatively speaking – the most cost effective on this planet and have been for a very long time. This is true whether it’s disposable personal income or percentage of household spending.
For example, data from the U.S. Department of Agriculture shows Americans spent in 2023, probably the most recent 12 months for which data is out there about 11.2% of their disposable personal income – or income after taxes – on food. That was unchanged from 2022.
This includes each spending on food at home – typically purchased in supermarkets and other grocery stores – and on food purchased “away from home” in restaurants and the like. Interestingly, the share of the “away from home” component of total food spending has increased because the COVID-19 outbreak.
Food prices all over the world
Nobody likes paying more for food, but a bit comparison data can lessen the sensation of victimhood, if not ease the wallet pain.
Cross-country data compiled by the USDA shows that Americans in 2022 spent less on food in proportion to total consumer spending than people in every other country. In many other countries, people spent, in percentage terms, two, three or 4 times as much, sometimes much more.
Differences were biggest between the United States and low-income countries in South Asia and Africa—Bangladesh, Myanmar, and Ethiopia, for instance—but were also quite large between the United States and middle-income countries similar to Argentina, Brazil, China, Costa Rica, and Mexico .
These differences should not entirely surprising. Why not? Because, because the German statistician Ernst Engel first discovered within the mid-Nineteenth century, family or household income increases as family or household income increases the share of total expenditure on food falls. After all, you’ll be able to only eat a lot, regardless of how wealthy you’re.
Scientists have found Engel's insight still applies in today's worldwhich provides context for the sharp differences between low- and middle-income countries and the United States
However, there are large differences between the United States and other high-income countries similar to Japan, Sweden, Norway, France and Italy within the share of spending on food significantly lower than in all these others wealthy countries. This is partly because economies of scale play a bigger role in American agriculture.
Of course, if one is so inclined, one can point to certain negative environmental impacts in American food production and query the best way animals and staff are treated within the American food system, which values efficiency—or a minimum of low prices—above all else .
But food being comparatively dirt low-cost, even at a time of rising food prices, is an issue that virtually every other country on this planet would really like to have.
image credit : theconversation.com