After finding inconclusive evidence that grocers were price gouging at the retail level, Attorney General William Tong announced his Office’s intent to investigate the next rung of the ladder: wholesale suppliers. The efforts are a part of the Attorney General’s price-gouging investigation launched last year.

“No one needs a report to see that grocery prices are way too high and that Connecticut families are getting squeezed,” said Tong. “We are continuing our inquiry up the supply chain and will not hesitate to use the full weight of our enforcement authority against any unlawful profiteering and federal overreach harming consumers.”

The Office sent a letter to “five of the top food distributors with footprints in Connecticut,” read a statement released by the Attorney General’s Office (AGO). The distributors are unnamed at this time. In a letter addressed to the state’s legislative leadership, the Office announced its inconclusive findings, the process it has undertaken thus far, as well as announced their intent to go further. An omnibus consumer protections bill passed last session gave the AGO the ability to look above the retail level, a power it plans on using to assess the wholesale suppliers that provide grocers with their product. 

“We did not identify evidence of enhanced or extraordinary profit margins indicative of price gouging in violation of Connecticut law,” read the letter. “But like food shoppers, retailers do not have access to their suppliers’ internal pricing and profit margins, so they were unable to identify sources of potential price gouging for our inquiry.”

The letter necessitated the Office’s inquiries into the fact that grocery prices have remained high since the pandemic, even as prices in other sectors have since lowered. The Office cited statistics from the Consumer Price Index (CPI) to support its finding, calling the persistently high prices “alarming” and their “perceived permanency” as being “deeply concerning.” Additionally, the letter pointed to a recent Federal Trade Commission study into the topic that determined grocery retailers have received “elevated profits” since the pandemic.

“Based on the findings in the FTC staff report, coupled with significant public concerns about the cost of food for Connecticut families, and discussions with legislators, the Connecticut Office of the Attorney General sent letter inquiries to Retailers, representing ten grocery chains in our state,” reads the letter. “We requested data on the wholesale cost and corresponding retail price for nine commonly purchased food items between March 2019 and June 2024.”

The Office compared the wholesale and retail prices of beef, chicken, bread, milk, eggs, bananas, apples, carrots and almonds in order to see if there were any signs of gouging, but found nothing unusual. The letter notes that grocery retailers historically run on slim profit margins, which hover anywhere from 1% to 3%, and that the pricing data analyzed by the Office, “reflected relatively consistent profit margins for the staple goods identified in the inquiry.”

The Office shared several possible factors for higher supplier prices via conversations it had with retailers. These factors include recent bird-flu outbreaks, increased fuel and energy costs, contractual disputes, and wheat-price hikes resulting from Russia’s invasion of Ukraine.

“Although we found no immediate evidence of illegal pricing at the retail level, there remains more work to do to investigate price gouging behavior,” read the letter. “The evidence reviewed indicated the need to expand our inquiry to other parties further up the food supply chain to determine whether anyone in those roles inappropriately realized outsized profits during the last state of emergency.”

The AG’s office announced their intent to contact “appropriate grocery wholesalers and distributors that sell to Connecticut retail grocers to discuss their pricing practices and behavior directly.” The Office also announced its intent to get to the bottom of ‘shrinkflation,’ or the phenomenon of companies sneakily selling a reduced portion of a product at the same price as before. The letter also noted that the data reviewed by the Office was gathered prior to the initiation of Trump’s tariffs or deportations, which will play an outsized role in grocery prices moving forward.

“We are still left with an incomplete understanding of why food prices remain elevated in our State,” read the letter. “Although we found no immediate evidence of illegal pricing at the retail level, there remains more work to do to investigate price gouging behavior.”

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