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    Monday, June 24, 2024

    Are Conn. grocery stores ‘price gouging’? Attorney general launches probe

    Connecticut Attorney General William Tong announced his office is seeking detailed cost and profit information from retail grocers in the state in an effort to determine whether their business practices are partly to blame for persistent high food prices.

    The announcement Thursday came just a day after the U.S. Bureau of Labor Statistics reported another month of stubbornly high inflation — with prices rising 3.5% from the same period last year.

    “Every single day, people in Connecticut, families are getting squeezed,” Tong said. “Our job, collectively, is to push back on that squeeze and to give Connecticut families just a little bit of breathing room.”

    Tong said he was prompted to pursue the inquiry after a Federal Trade Commission report, released last month, found that major grocery chain profits “rose and remain elevated” in the wake of pandemic-induced disruptions to food supply chains — even after those disruptions appeared to have eased.

    In 2021, revenues were more than 6% higher than costs among the food and beverage retailers FTC studied. And for the first three quarters of 2023, as inflation began to ease, those retailers’ profits reached 7%, the report found.

    “This casts doubt on assertions that rising prices at the grocery store are simply moving in lockstep with retailers’ own rising costs,” the report reads. FTC recommended “further inquiry” by policymakers into grocery chains’ business practices.

    Connecticut’s Democratic party leaders are heeding that call. The attorney general’s office will begin sending out letters of inquiry to grocery retailers in the coming days.

    But food businesses in Connecticut said state officials should be careful how they assign the blame for higher prices.

    In an emailed statement, Wayne Pesce, president of the Connecticut Food Association — a trade group representing food retailers, wholesalers, distributors and other businesses — said inflation has shown up in many industries, from housing and health care to energy and transportation. “Will these industries be asked to report profits?” he asked.

    Pesce went on to point out that the FTC study was focused on markets distinct from those where Connecticut food retailers operate.

    “Since the study did not directly investigate the operations of grocery retailers in Connecticut, applying its findings to justify profit reporting requirements for local businesses is not appropriate,” Pesce wrote. “Every market has its unique dynamics, and extrapolating conclusions from a study conducted on national retailers could lead to misconceptions and unfair burdens on Connecticut businesses.”

    State Senate leaders see it differently.

    “This additional study is imperative to understanding the rising prices of groceries and how we can protect consumers from any price gouging,” Senate Majority Leader Bob Duff, D-Norwalk, said at Thursday’s press conference.

    Duff, along with Senate President Pro Tem Martin M. Looney, D-New Haven, said they also plan to seek expanded authority for the attorney general to investigate profiteering throughout the food supply chain, from distributors to producers. (Currently, Tong’s authority to conduct such inquiries only extends to retailers.) The expansion will be proposed as an amendment to Senate Bill 3, which calls for several changes to consumer protection laws, Democratic leaders said.

    “There seems to be some indication that the price of groceries has stayed artificially high in the wake of [the pandemic] even though the crisis justification for it has passed,” Looney said. “So it’s another case of corporate opportunism to add to profits at a time when it’s really not justified.”

    Republican state leaders responded to the proposal Thursday with skepticism, instead laying the blame for high prices — which they termed ‘Bidenflation’ — on Democratic party policies.

    “They’re being a little disingenuous if they don’t think they have a part in what’s going on,” said Rep. Dave Rutigliano, R-Trumbull. Policies like the highway use tax and annual increases in the statewide minimum wage add up for businesses on top of Connecticut’s relatively high energy and other costs, Rutigliano said.

    “Government absolutely has a major responsibility for the high prices that we pay for everything,” he said.


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