President-elect Donald Trump has been a vocal critic of rising grocery prices throughout his campaign, even giving a speech outside his New Jersey home in August, next to a table covered in cereal boxes, coffee grounds and ketchup.
A wave of consumer discontent appears to have helped him return to the Oval Office, but Trump must now find a way to assuage voters’ frustration.
Food inflation peaked at more than 10% in 2022, but price increases have slowed to about 2%, according to data from the U.S. Bureau of Labor Statistics.
Yet a years-long period of rapid inflation has driven food prices up more than 25% since President Joe Biden took office.
Prices generally don’t fall everywhere unless the economy slows or even slides into recession, which would reduce consumer demand but also impose economic hardship, some economists told ABC News.
Still, Trump could adopt policies that could slow the rise in food prices, or even reduce the cost of some basic necessities, economists added.
“The prices of different items absolutely could go down,” Michael Faulkender, a finance professor at the University of Maryland’s Robert H. Smith School of Business, told ABC News.
In response to ABC News’ request for comment, the Trump transition team said in a statement that Trump intends to follow through on commitments he made during the campaign. But the transition team did not specifically address the issue of food prices.
“The American people re-elected President Trump with an overwhelming majority, giving him a mandate to implement the promises he made on the campaign trail. He will keep them.” Karoline Leavitt, a spokesperson for the transition team, told ABC News.
Increase oil production
On the campaign trail, Trump often responded to concerns about pricing with a three-word mantra: “Drill, baby, drill.”
Trump, who has downplayed human-caused climate change, has pledged to support the oil and gas industry by easing regulations and increasing production.
In theory, an increase in oil production could lower food prices, as gas is a key source of costs throughout the supply chain, from growing crops to harvests or their transport to the seller, economists estimate.
“Energy is a significant cost of food,” David Andolfatto, an economist at the University of Miami, told ABC News. “This is expected to put downward pressure on food prices.”
Although such a move could prove beneficial, the increase in oil production under President Joe Biden has coincided with the surge in inflation in recent years. Since oil is sold on the global market, an increase in domestic production might not lower prices for U.S. consumers as much as some might think.
The United States set a record crude oil production in 2023, averaging 12.9 million barrels per day, according to the U.S. Energy Information Administration, a federal agency.
Further increases in oil production risk accelerating the country’s carbon emissions and worsening the impact of climate change, leading to long-term costs, said Luis Cabral, an economics professor at the University. from New York, to ABC News.
“We can’t just look at the benefits,” Cabral said, acknowledging the potential for lower food prices. “There are also significant costs in terms of emissions and climate change.”
Strengthen antitrust enforcement
To combat rising food prices, the Trump administration could crack down on market concentration, a term economists use to describe the dominance of a given industry by a handful of companies, some experts said.
They have pointed to the market power of large companies as a cause of rapidly rising prices, saying that companies take advantage of their outsized role in the market to raise prices without fear that a competitor will offer a product comparable to one more affordable price.
BEDMINSTER, NEW JERSEY – AUGUST 15: Republican presidential candidate, former U.S. President Donald Trump, holds a press conference outside of Trump National Golf Club Bedminster on August 15, 2024 in Bedminster, New Jersey. Trump campaign leaders have announced they will expand their staff as the re-election campaign enters its final months. (Photo by Adam Gray/Getty Images)
Adam Gray/Getty Images
“Whenever there are fewer players in an industry, prices tend to be higher,” Cabral said. “Supermarkets are no exception.”
Grocery store profit margins jumped in 2021 and grew even more two years later, even after price increases began to subside, a Federal Trade Commission study released in March showed.
In February, the Federal Trade Commission filed a lawsuit to block the merger of the Kroger and Albertsons supermarket chains, which would amount to the largest supermarket merger in U.S. history. The proceedings are ongoing and will likely extend into the Trump administration.
Some economists question the potential benefits of antitrust laws, saying the recent surge in inflation has coincided with rising production costs during the pandemic. “It’s hard to argue that this is therefore some kind of profit,” Faulkender said.
Prohibition of price gouging
During the campaign, Vice President Kamala Harris proposed a federal ban on price gouging on food and groceries.
The plan could resemble price gouging bans in place in 37 states, which prohibit sudden price increases on scarce products, the Harris campaign said. These bans prohibit companies from exploiting a sudden imbalance between supply and demand by significantly raising prices.
Although Trump might be reluctant to adopt a policy proposed by his supporter, he could propose a ban on price gouging as a way to prevent large price increases for specific products.
For example, egg prices soared 30% in the year ending in October, data from the U.S. Bureau of Statistics showed Wednesday. This increase is mainly due to an epidemic of avian flu which decimated the supply. Last year, egg prices soared more than 60% in response to a similar outbreak of bird flu.
Economists who spoke to ABC News differ on the effectiveness of a possible ban on price gouging.
Some economists have dismissed the policy as an imperfect solution, as state-level bans are typically only triggered in emergencies and, even then, often lack clarity on what type behavior of companies which constitutes an increase in prices.
“I don’t think a federal ban on price gouging would do any good,” Cabral said.
Andolfatto, of the University of Miami, said a ban on price gouging could lower food prices if it prohibited rapid price increases in certain circumstances. However, these advantages could be outweighed by the disadvantages, as such a ban could override the market signal sent by prices, which help direct the distribution of goods to places where they are scarce.
“These types of interventions have unintended consequences,” Andolfatto said.
