Here’s how to flex your power against rising prices

Here’s how to flex your power against rising prices

The term “price gouging” occasionally enters the personal finance conversation in America. Some of us remember when $40 Tickle Me Elmo dolls sold for $100, and Sony Playstation 3 systems went for $20,000 on eBay. The supply is low, but the demand is sky high, making it easy for price goblins to waste dough. And, of course, there are times of local or national emergency when everyday supplies, such as bottled water, hand sanitizer, and toilet paper, are hoarded and sold at such a high markup that families are forced to withdraw from emergency savings accounts to pay. requirements.

But how do you know when a price increase is happening, and how do you tell the difference between gouging and inflation?

How do you identify the problem?

The American Bar Association describes price gouging as the practice of raising the price of goods or commodities to an unreasonable, unjust, or excessive level, especially during a declared state of emergency.

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But it can be difficult to tell the difference between rising prices and inflation. In a nutshell, here is the difference between the two:

  • Inflation is a general increase in prices due to ordinary economic factors such as demand and supply over time. When demand is higher than supply, prices naturally rise. When supply is higher than demand, prices fall. This is a natural phenomenon.
  • Price increases are opportunistic. This often happens on a smaller scale and usually at a time when consumers have no choice but to buy a product at a higher price. For example, if your area has just been hit by a hurricane and the only bottled water you can find for your family is selling for 20 times the regular price, that’s price gouging.

The US Public Interest Research Group (US-PIRG) says, “Businesses are allowed to raise prices, but they are not allowed to raise the price of products excessively to take advantage of the current crisis. % can be considered as price increase.”

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Sometimes inflation is just inflation

As mentioned earlier, inflation occurs naturally in the economy. Let’s say that home builders suddenly pay 30% more for a necessary supply, such as lumber. Instead of eating the loss themselves, the price of building a house is likely to increase. If a company that makes sports jerseys gets hit with a higher license fee from the NFL or MLB, the price of their jerseys will go up. The increase in prices may simply represent a desire to stay in business.

The National Library of Medicine reminds us of a time early in the COVID-19 pandemic where a 2-liter bottle of Purell sold for $250. That’s clearly a price hike.

Flex your muscles as a consumer

Often, everyday shoppers need to look out for the financial well-being of their neighbors.

If you are unsure if you have witnessed price gouging, US-PIRG recommends erring on the side of caution and reporting the incident to your State Attorney General’s office. You can find the office address, phone number, website, and email address online.

Contacting consumers is the only way state officials will know if a price increase has occurred. Thirty-seven states, plus Guam, Puerto Rico, the US Virgin Islands, and the District of Columbia, currently have laws or regulations against price gouging, and most of these laws carry civil penalties.

Gather the following information before contacting your State Attorney General’s office:

  • Name and address of the store or vendor where you saw the item.
  • Product details, such as product type, brand, size, and asking price.
  • Date, time, and location you saw the item.
  • If possible, give a picture of the thing you saw.

There are always people who will be happy to empty a customer’s checking account to fill their own, but that doesn’t mean they should avoid it. If enough consumers make a report when they notice suspicious price gouging, some of the worst offenders can be shut down.

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