If you live in the United States and you’ve been feeling an extra pinch at the grocery store, you are not alone and it's not your imagination.
During the 2020 presidential election cycle, food inflation in the U.S. was 3.9%. With less than 50 days left before the 2024 presidential election, food inflation has reached 25.8%, more than six times the inflation in 2020.
Former President and Republican Presidential candidate Donald Trump has responded to negative polling showing a small lead for his Democratic opponent, Vice President Kamala Harris, by attacking her and Democrats as the party responsible for the country’s food inflation.
The Trump campaign’s new political ads attack Harris for having been the deciding vote that passed the 2021 American Rescue Plan, President Joe Biden's $1.9 trillion pandemic relief measure that disbursed funds to businesses and local governments.
Inflation reached a 40-year high in 2022, rising 9.1% compared to 2021. While economists have pointed to the American Rescue Plan as a potential factor, the main drivers of this sustained inflation are considered to be supply chain issues during the pandemic, the conflict in Ukraine, which spiked oil prices, and corporate price gouging.
The Fed Finally Lowers Interest Rates.
To fight inflation, the Federal Reserve raised interest rates eleven times between March 2022 and July 2023, from near 0% to between 5.25% and 5.5%. Raising the Federal interest rate is a key measure to control inflation—as long as it doesn't bring the nation into a recession.
With the 2024 presidential election near, the Fed has finally lowered interest rates by a whopping 0.5% in order to head off a potential economic slowdown.
Lowering interest rates will make it cheaper for businesses to borrow money for expansion, but it's unlikely to address the whole issue because part of the problem has been corporate price gouging.
In May, Sen. Sherrod Brown (D-OH), chairman of the Senate Committee on Banking, Housing, and Urban Affairs, delivered a statement pointing to corporate profiteering as part of the cause of consumers' pain at the grocery store.
"Prices today are far too high, and families are having a harder time finding a fair price, seeing more of their paycheck vanish into thin air." Brown said. "All of this is happening while corporate profits hit record highs. Let's be clear: the fact that prices and corporate profits are going up at the same time is no coincidence."
Brown said that a study by the Kansas City Fed found that corporate profits drove half of the price increases in 2021.
As the Democratic candidate for president, Harris seems to concur that a policy solution is needed to control corporate price gouging, which has worsened the impact of inflation.
"My plan will include new penalties for opportunistic companies that exploit crises and break the rules," Harris said at an Aug. 16 campaign event.
Jason Furman, a leading economist in the Obama administration, objects to Harris' statement and feels that efforts to regulate corporate prices will ultimately hurt the consumer.
"It's more likely to maintain that status quo, because it would keep new competition from moving in to take advantage of the bigger profit margins — competition that could have helped lower prices in the long run," Furman said.
Blockchain May Have a Solution
When looking for a solution to corporate price gouging, it's hard to find a compromise between a corporation's need to post ever-increasing profits year-over-year and the consumer's need to live and buy food.
However, blockchain could have a solution if the next administration elected in November is ready to embrace the power of new technology.
Dan Weinberger, CEO of Morpheus MNW/USD, a supply chain platform built on the Ethereum network, suggests that increasing efficiency in supply chain tracking on the blockchain could reduce costs for retailers, allowing them to maintain profits while controlling consumer prices.
"Blockchain is fundamentally an indelible ledger, so it's a perfect platform for tracking prices within an intricate global supply chain matrix. If large corporations have more visibility into their supply chains, they can purchase more effectively, eliminate redundancies, and source from the most desirable vendor," Weinberger said.
"It's hard to spur economic growth by creating legislation that punishes businesses for taking profits. Whoever holds the U.S. presidency after November, we hope to work with the administration to help them understand the solutions that are already available to streamline supply chains and reduce costs."
Crypto prices dropped in mid-September after what looks to be the sole 2024 presidential debate between Harris and Trump favored Harris, and superstar singer Taylor Swift endorsed the vice president.
Trump has positioned himself as the Bitcoin-friendly candidate to court the crypto enthusiast voter.
Recently, Trump visited Pubkey, a Greenwich Village-based bar which accepts Bitcoin BTC/USD. Trump paid for the patrons' food using Bitcoin, a transaction he described as "very easy. It goes quickly and beautifully."
Trump said it was his first Bitcoin transaction, but the event caused a price lift.
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