10 sats \ 4 replies \ @om 15 Sep 2023 \ on: Why we need Bitcoin: Canada Fed is blaming and threatening Grocers... 🤯😧 bitcoin
I don't believe that food price gouging exists. Prices are usually set at a point of maximum profitability except where a social concern exists, for example, a sole producer of an important medicine might price it lower than the maximum profitability point due to social concern. However, the food market is very far from a monopoly, so food producers can't artificially lower their profits because that would instantly kick them out of the market. Therefore food prices are always at the point of maximum profitability.
Agree with profitability... but also disagree. There are only a handful of grocers conglomerates that can offer lower prices in Canada. Then there are all the independent ones with higher prices overall.
One of Canada's largest grocers just posted a ~50% YOY profit revenue increase from last year. 🤔😳
Prices of some goods on the shelves haven't matched inflation or anywhere near it... more than doubling over the past few years. And, importantly, increases in costs of production aren't matching the increased prices consumers are facing either.
If costs to produce X goods didn't double YOY, and inflation didn't double YOY... then what accounts for more than doubling of small consumer goods YOY?
Nothing. They upped prices for more profit. Maybe "gouging" is the wrong word here.
I'm not disagreeing with their ability to charge whatever they want... but I also understand the public's anger at it.
Esp. since there is a concentration of grocers.
reply
💯
reply
You imagine 50% profit increase as a big number but that might just be from 2% to 3%. Or from 0.2% to 0.3%. This number by itself is meaningless.
They upped prices for more profit.
That is a perfectly valid move in a market economy: prices should be expected to be at the point of maximum profitability. You say that they raised prices for no reason other than to make more profit, but that would imply that before the raise the prices were below the point of maximum profitability, which I find hard to believe. It is more likely that the prices changed exactly because the point of maximum profitability shifted, and that can't just happen for no reason at all, and neither can it happen just because the company really wants it to happen. There must be some objective factors behind it.
I'd guess it's likely that the production costs rose. For example:
Prices paid by farmers for fertilizer were up by over four-fifths (80.8%) in the second quarter of 2022 compared with the second quarter of 2021. https://www.statcan.gc.ca/o1/en/plus/2413-growing-and-raising-costs-farmers
reply
Great points. Stats are subjective.
reply