US Food Prices to Remain High Next Year... Summers Says Biden's Antitrust Prescription Is a Mistake

[Asia Economy New York=Correspondent Baek Jong-min] There is a forecast that food prices in the United States will rise significantly next year. Although the Biden administration has proposed measures to block inflation caused by monopolies, economic experts have pointed out that the solution is flawed.

[Image source=Reuters Yonhap News]

The Wall Street Journal (WSJ) reported on the 27th (local time) a list of foods expected to see significant price increases next year.

As many food companies have announced price hikes, most processed foods such as coffee, mustard, snacks, mayonnaise, and frozen foods are expected to change their price tags next year in succession.

Confectionery company Mondelez recently announced that it will raise the prices of snacks and candies by 6-7% starting January next year. Campbell Soup, famous for canned soup, also plans to raise prices from January next year. General Mills has already announced cereal price increases.

Kraft Heinz has notified that it will raise prices of several products such as pudding and mustard by an average of 5%, with some items increasing by up to 20%.

The phenomenon of grocery price increases is due to soaring production costs such as labor, raw materials, and logistics.

Kraft Heinz stated that it has not reflected all cost increase factors in the price hikes. Kraft Heinz explained that although production and distribution costs for mustard have surged by 22%, consumer prices will only increase by 6-13%.

Research firm IRI forecasts that food and grocery prices will rise by an average of 5% in the first half of next year, but WSJ estimates that grocery price increases next year will range from a minimum of 2% to a maximum of 20% across all sectors.

There is also an expectation that heavier vegetables such as potatoes and celery will become more expensive due to transportation cost burdens compared to their prices. Even inexpensive frozen foods are expected to inevitably see price increases due to rising logistics, packaging costs, and labor costs.

Alcoholic beverages such as beer and wine are also expected to join the price increase trend.

WSJ reported that some grocers are securing inventory before prices rise further, but due to the nature of food products, such measures have little effect.

◇ Pressuring meat packaging companies to control meat prices is a mistake = The U.S. government is viewing the rapid inflation as a phenomenon caused by monopolies and is applying pressure through the Federal Trade Commission (FTC), but this diagnosis is considered incorrect.

A representative example is oil companies and meat packaging companies. President Biden instructed the FTC to investigate collusion to curb soaring oil prices, but the expected drop in oil prices has not materialized.

Following petroleum, meat is also a target of government attacks. A recent report released by the White House National Economic Council (NEC) criticized meat processing companies for exploiting market dominance to make excessive profits. Meat prices in November rose 16% compared to the same month last year. NEC argued that due to lack of competition, meat prices are not falling.

In response to NEC's claims, the North American Meat Institute argued that the White House overlooks the fact that demand for beef, pork, and poultry is at record levels. Julie Anna Potts, president of the North American Meat Institute, expressed strong dissatisfaction, saying, "The White House has once again shown ignorance of the basics of supply and demand for agricultural products."

Harvard Business School professor Larry Summers also criticized the Biden administration's prescription of combating inflation through antitrust measures.

Professor Summers said that the White House brought up antitrust laws to deflect criticism of inflation, stating, "Dismantling large meat packing companies will reduce supply and cause prices to rise further."

Professor Summers emphasized, "There is no evidence to support the claim that monopolies have increased while inflation has risen over the past year."

Professor Summers' solution is completely different from the White House's claims. He suggested that stopping the Buy America policy and lifting tariffs and energy regulations are necessary to reduce inflation.

Professor Summers expressed concern, saying, "The government's war against companies causes unintended consequences by limiting investments that would lead to inflation reduction."

This content was produced with the assistance of AI translation services.