Why Are Grocery Prices Rising So Much Faster In Massachusetts?

Why are grocery prices rising so much faster in Massachusetts?

On what feels like the unstoppable rise of grocery prices in the US.

Written by

The Boston Globe


20 May 2024

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No, it’s not just you. Those trips to the supermarket are indeed testing our collective pocketbooks — and patience.

Grocery bills in Massachusetts, especially the Boston area, have been rising faster than in most of the country, even as overall inflation has cooled. Bay Staters are often paying more for beverages, meat, cereal, and vegetables, whether they shop at Market Basket, Stop & Shop, Shaw’s, or Whole Foods.

For example, five years ago at this time, consumers could buy Florida Natural orange juice for $1.99; today the same product goes for $4.49.

“The prices are insane,” said Karla Cohen, 46, of Lincoln.

Consumers who live in cities with higher costs of living tend to pay more for groceries. But over the past 15 months, shoppers in Boston have seen their grocery bills rise considerably faster compared with other metro areas across America. And grocery prices have risen faster than overall inflation.

The nagging inflation demonstrates Massachusetts’ particular challenges, such as high transportation and energy costs and the lack of a large grocery retailer with enough size and clout to cut prices across broad food categories and force others to do the same. As a result, the extra costs have eroded consumers’ purchasing power, prompting residents to forgo or reduce purchases of foods to save money.

“We never buy meat anymore,” said Cohen, an artist and college admissions consultant. “That’s a luxury we save for special occasions.”

A study by Consumer Affairs found that grocery prices in Massachusetts as of last November rose 6.6 percent over a 12-month period, the sixth-highest rate in the country.

Since January 2023, the Boston metro area experienced sharper increases in grocery prices versus other high-cost cities, including New York, Chicago, San Francisco, and Los Angeles, according to the Consumer Price Index, the government’s primary inflation gauge.

“It’s mind-numbing to see the increases over the past few years,” said Edgar Dworsky, a former Massachusetts assistant attorney general in consumer protection who founded Consumer World, an advocacy website.

Factors such as supply chain problems, drought, and global conflict, including the war in Ukraine, play a role in rising prices. But experts say what also makes Boston and Massachusetts feel inflation more intensely is the region’s highly fragmented market.

The metro area is home to a plethora of local, regional, and national chains, each controlling only a relatively modest piece of consumers’
grocery dollars.

Normally, competition means lower prices. But sometimes, there can be too much competition. In other words, Boston lacks a chain with enough size and market power to reduce prices and pressure others to follow suit.

Boston is a unique market. There's no big consolidated national chain, that can really move the price needle.

Jeff Bornino, TMX North America President

"Boston is a unique market," said Jeff Bornino, a former supply chain executive at Kroger and Giant Eagle who is now North American president of TMX Transform consulting firm.

"There's no big, consolidated chain that can really move the price needle."

At the same time, fast-growing, ultra-low-cost retailers like Aldi and dollar stores, formats that have upended traditional chains elsewhere, have yet to really expand into Boston.

Most grocery chains contacted by the Globe declined to comment or did not respond to requests for comment.

“I do hear from members throughout the retail and nonretail sectors that costs have risen in the supply chain since the pandemic and have not ceased in every aspect from farm totable,” Brian Houghton, the top lobbyist for the Massachusetts Food Association, wrote in an email.
Since the pandemic, which broadly disrupted international supply chains, grocery prices across the country have shot upward. In addition, specific commodities have faced their own supply challenges.

For example, Russia’s 2023 invasion of Ukraine, which produces 10 percent of the world’s grain supply, sent global wheat prices soaring.

More frequent droughts, the result of climate change, have meant fewer pastures for cattle to graze on, forcing ranchers to limit beef production. And in 2022, the United States suffered its worst outbreak of avian flu, affecting more than 80 million chickens, turkeys, and other birds, which severely reduced the supply of poultry and eggs.

But Massachusetts’ circumstances have also contributed to more expensive food. The state lacks a large agriculture industry, so it must import meat, fruits, and vegetables from places such as California and Texas.

The state is also plagued with some of the highest energy prices in the country. Supermarkets’ reliance on refrigerators and freezers means high electric bills, costs they pass onto consumers.

Regulatory laws can also contribute to rising costs, Dworsky said. In 2016, four years before the global pandemic, Massachusetts voters overwhelmingly approved the Act to Prevent Cruelty to Farm Animals, which required eggs, veal, and pork sold in the state to meet animal welfare standards.

Meat and egg prices have risen, but a Globe analysis of CPI data from January 2023 to March 2024 for the Boston-Cambridge-Newton area found that the categories experiencing the largest and most consistent price increases were cereal and bakery, dairy, and nonalcoholic beverages.

Lee Williams, 57, a tutor who lives in Chelmsford, said she buys less meat and cooks from scratch instead of buying processed foods. She adds fewer portions of chicken to her stir-fries, hoping to “stretch out the meat” for two or three weeks.

“I don’t like to pay more than what is needed,” Williams said.

Economists and industry analysts also say a region’s competitive landscape can determine if retailers can shield consumers from price hikes.

Since the 1990s, two of the most disruptive forces in retail have been Walmart and Amazon. Both companies were able to rapidly expand because they were willing to lose money at first by charging prices significantly lower than competitors, eventually putting many out of business. These retail giants also use their enormous size to pressure suppliers into selling products to them at big discounts, which they would theoretically pass on to consumers.

But aside from acquiring Whole Foods, Amazon has struggled to build a grocery business, analysts say. And Walmart has had a harder time penetrating denser urban markets like those in the Northeast. The company operates about 20 stores near Boston in suburbs such as
Lynn, Framingham, and Quincy.

Walmart, the nation’s largest grocery chain, actually trails Market Basket, based in Tewksbury, and Stop & Shop for local market share, according to Chain Store Guide.

The rest of the grocery market is divided among a hodgepodge of national and local chains, each controlling a relatively modest piece of the pie.

This article was written by Thomas Lee and originally published in The Boston Globe on May 20, 2024.

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