“Congress has stalled out on doing work that it could do to help families lower costs," Sen. Warren tells TIME. "The President has the tools to fight back.”
The idea of prices going up and down by the same amount is based on an equilibrium situation. This isn’t ruled out; it could very well be that the high profits of grocery companies is transient (or “transitory” as they say). But in the short run, prices don’t move in lockstep.
Aside from market power or collusion, there are other reasons prices could shift more quickly for some sectors than others (even as all prices are going upward). For example, does the industry rely on long term contracts or short term contracts? Is inflation hedging widely available for the goods and services in question? Is the activity more or less sensitive to interest rates?
But these are questions about relative prices. Instead of playing a game of whack a mole, better not to set off inflation in the first place.
The idea of prices going up and down by the same amount is based on an equilibrium situation. This isn’t ruled out; it could very well be that the high profits of grocery companies is transient (or “transitory” as they say). But in the short run, prices don’t move in lockstep.
Aside from market power or collusion, there are other reasons prices could shift more quickly for some sectors than others (even as all prices are going upward). For example, does the industry rely on long term contracts or short term contracts? Is inflation hedging widely available for the goods and services in question? Is the activity more or less sensitive to interest rates?
But these are questions about relative prices. Instead of playing a game of whack a mole, better not to set off inflation in the first place.