With inflation at a near 40-year high, the biggest corporations are cashing in "on the backs of the American people," by crimping competition and raising prices, said Senator Mark Kelly (D, AZ).
In Kelly’s home state of Arizona, its largest cities saw cost pressures outpace the national average last year, with inflation rising 9.7% last year in the Phoenix metro area, compared to 7%, according to data from the Bureau of Labor Statistics.
“We're at full employment [in Arizona] right now ... but prices have gone up for gasoline, ground beef, milk, eggs, nearly everything,” he told Yahoo Finance. “These rising costs are really hurting Arizona families and families across the country.”
The price increases have been especially pronounced in food and energy. Energy prices in Arizona jumped 40% in the last year, while food prices soared 5.4%.
Nationally, meat prices have led the way, with a 16% climb from a year ago. Beef prices skyrocketed 20%.
Supply chain snags have been a big contributor. COVID-19 induced plant closures, labor costs brought on by staffing shortages, and input shortages have all contributed to the rising cost of producing goods and services.
But Kelly has pointed the finger largely at big players in the food industry, particularly the small number of companies controlling meat products, accusing the companies of price gouging. In a letter sent to the Secretary of Agriculture and Transportation last month, he urged the Department of Agriculture and Department of Justice to "accelerate" their investigations into the meat-processing industry, crack down on anti-competitive behaviors in the meatpacking industry, and provide additional growth opportunities for small businesses.
“Ranchers are getting the same amount for their beef that they did before the pandemic, but the prices have gone up. They're not getting more for their product, though consumers are now paying, in Arizona, about $5 a pound for ground beef,” Kelly said. “So something is happening, where the product goes from the ranch to the market.”
Just four large meatpacking companies control 85% of the beef market, leaving the market more vulnerable to price manipulation, according to data released by the White House. That number sits at 54% for poultry and 70% for pork.
The Biden administration has aimed to loosen that grip by providing $1 billion in funds from the American Rescue Plan to help expand independent processing capacity, and improve the distribution of their products by giving smaller meat producers access to cold storage and other equipment. It’s also called on lenders to deploy more capital to independent processors that need credit.
“We want Arizona families and families across the country to be able to afford groceries. This has been really challenging,” Kelly said. “I think this is going on in other industries, where you have big corporations that are taking certain steps to increase their profits on the backs of the American people.”
Kelly has also sought to bring prices down, by improving bottlenecks in the delivery system brought on by a labor shortage. The shortage for truckers hit an all-time high last fall, with 80,000 drivers needed, according to the American Trucking Associations. That number is expected to surpass 160,000 by the end of the decade.
Kelly pushed to create a pilot program that lowers the age for drivers allowed to haul loads across state lines, to 18-21 year olds. He also called for additional funding to states to improve the approval for commercial driver’s licenses.
“We had over 1.5 million additional Americans retire earlier than expected during the pandemic. That's a lot of people that just disappeared out of our workforce,” Kelly said. “You’ve got to make sure you have the right people, you’ve got to make sure you train them well, and they're going to do the job in a responsible way. But there are steps we can take to alleviate that supply chain issue.”
Akiko Fujita is an anchor and reporter for Yahoo Finance. Follow her on Twitter @AkikoFujita