Price increases when demand exceeds supply are textbook economics. The question is whether, and how much, the pandemic yielded an excess take.
In detailing her presidential campaign’s economic agenda, Vice President Kamala Harris will highlight an argument that blames corporate price gouging for high grocery prices.
That message polls well with swing voters. It has been embraced by progressive groups, which regularly point to price gouging as a driver of rapid inflation, or at least something that contributes to rapid price increases. Those groups cheered the announcement late Wednesday that Ms. Harris will call for a federal ban on corporate price gouging on groceries in an economic policy speech on Friday.
But the economic argument over the issue is complicated.
Economists have cited a range of forces for pushing up prices in the recovery from the pandemic recession, including snarled supply chains, a sudden shift in consumer buying patterns, and the increased customer demand fueled by stimulus from the government and low rates from the Federal Reserve. Most economists say those forces are far more responsible than corporate behavior for the rise in prices in that period.
Biden administration economists have found that corporate behavior has played a role in pushing up grocery costs in recent years — but that other factors have played a much larger one.
The Harris campaign announcement cited meat industry consolidation as a driver of excessive grocery prices, but officials did not immediately respond on Thursday to questions about the evidence Ms. Harris would cite or how her proposal would work.
There are examples of companies telling investors in recent years that they have been able to raise prices to increase profits. But even the term “price gouging” means different things to different people.