Food prices are soaring, but something else is much higher too. Corporate profits.
Last year, the cost of a bag of chips was an average of $5.05. That has increased a dollar to $6.05. A dozen eggs a year ago could be grabbed for an average of $1.83, and now costs $2.90. A two-liter soda bottle that was $1.78 is now $2.17.
PepsiCo’s costs of drinks and chips went up 17 percent in the latest quarter from year-earlier levels. And its third-quarter profit grew more than 20 percent. Its main competitor Coca-Cola had profits jump up 14 percent from a year prior.
Companies are profiting from their price increases.
Restaurant and fast food prices are hiking up as well. Chipotle’s prices are set to hit nearly 15 percent higher than a year earlier. And it cashed in with a massive profit of $257.1 million in the latest quarter, a 26 percent increase from the year prior.
For years, food companies and restaurants have raised their prices in small incremental steps. They feared any giant hike would frighten consumers and send them off to look for cheaper options.
But this past year has given them an opening.
Wages increased, as well as the cost of raw ingredients used to make treats like sodas, chips, and cookies. So too did the materials to package them.
Food companies and restaurants began to pass this increase in expenses onto their customers. Amid growing concerns about an economic recession, some food companies and restaurants have continued to raise their prices. They have chosen to do so even if their own inflation-driven costs were covered.
Critics and experts say the companies are all focused on increasing profits, not covering expenses.
Experts said recent earnings calls have only reinforced the familiar theme that corporations did not need to raise prices so high on struggling families.
Corporations used the excuse of inflation, the Covid pandemic, and supply chain issues as an excuse to exaggerate their costs, and then screw over the consumer, experts said.