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It’s easy to see food inflation on store shelves. It’s a lot harder figuring out who or what caused it.

Vice President Kamala Harris, the Democratic presidential nominee, wants to ban “price gouging” in the food industry to address the food inflation that has been the scourge of the economy for the last three years. Grocery prices are up 21% since Joe Biden entered the White House in 2021. Wages are up only 17%. Shoppers are losing ground on their grocery budgets.

When Donald Trump was president, food prices only rose by 6.5%, while wages rose 15%. That’s one big reason some voters give Trump an edge on his handling of the economy. Food and rent inflation helped drive Biden’s approval rating below 40%, one of the reasons he withdrew from the presidential race in July.

Harris obviously wants to reverse that negative vibe. But pinpointing a villain responsible for high food prices is not going to be the way to do it. To hunt for price gouging in the food industry, Yahoo Finance looked at profit and cost data in eight different sectors that represent the entire food industry, including agriculture, food production, distribution, and retail. This includes big names everybody has heard of, such as Walmart, McDonald’s, Coca-Cola, and Procter & Gamble, plus many of their competitors.

We used standard industry classification codes to gather data on eight sectors of the food industry, using Dow Jones ticker symbols for each sector and S&P Capital IQ to gather the data. Each ticker symbol represents a subset of publicly owned companies that belong to the S&P 500 index. So the profit and cost data we analyzed represents an aggregation of data for all the companies represented by each ticker symbol.

We compared average costs and profits from 2016 to 2019 with the same data from 2022 through 2024. The first period represents the pre-COVID economy, when inflation was low, while the second represents the post-COVID economy, when inflation was high.

Price gouging would be evident if profits went up by a lot more than costs during the last few years. That would reveal companies raising prices more than necessary to cover their own higher costs and making more money as a result.

We found little of that, however. Of the eight categories we looked at, profits grew by more than costs in only three of them. That suggests firms in those categories were passing on their own higher costs to consumers, plus a little bit more. But in the other five industries, companies seemed to be eating higher costs instead of passing them along.

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The biggest profit gain, relative to costs, has come deep in the food supply chain where most consumers would never notice. In the agriculture products and service sectors, post-COVID profits rose by 129%, while costs rose by just 75%. That means this industry is more profitable now than it was during the four years prior to COVID.

The biggest company in this sector is ADM, formerly known as Archer Daniels Midland, which processes agricultural commodities such as corn, stores and transports grain, and produces a variety of food additives, along with ethanol. ADM did become more profitable during recent years. From 2016 through 2019, its profit margin averaged 2.4%. That rose to 4.3% in 2022, when food inflation hit 12%. In earnings calls , executives explained how newfound “pricing power” was helping boost earnings.

Does that amount to “price gouging?” Meh. Companies, especially public ones, have a legal obligation to their shareholders to maximize profitability. Companies raise prices whenever they can get away with it. It’s the government’s job to figure out if companies are exploiting monopoly power or other unfair advantages. And ADM’s 4.3% profit margin hardly seems excessive compared with a company like Apple, which has a 26% margin.

At any rate, ADM’s profit margin is now drifting back down, and in its latest earnings call , executives discussed the challenges of lower, not higher, pricing. We've reached out to ADM for comment and will update this story if the company responds.

The only other sector with a meaningful increase in profitability in recent years was consumer staples retailers, which include Walmart, Costco, Target, and other chain stores. Post-COVID profits in this sector were up 67%, while costs were up 51%. That doesn’t seem like enough of a gap to constitute price-gouging. Such improved performance could come from efficiency gains as companies facing a surge in wholesale costs work harder to streamline operations.

The only other sector that's more profitable post-COVID is household and personal products, representing companies such as Procter & Gamble. But profits exceed costs by just 1 percentage point, which is basically a wash.

There are notable instances of food companies becoming less profitable. Restaurants are a standout. Post-COVID profits in this sector are up 8% while costs are up 50%. When McDonald’s, Chipotle, Starbucks, and other chains say they’re doing their best to limit price hikes, they have data backing them up. Other sectors representing companies such as Philip Morris, Mondelez, Kraft Heinz, and Coca-Cola also show declining profitability.

If companies aren’t price gouging, then what does explain high food inflation? It’s no single thing, but a number of factors consumers have been hearing about during the last several years.

A big one is labor costs. Strong economic growth and a shortage of workers in some areas have pushed labor costs to the highest levels in years . From 2010 through 2019, total compensation costs rose by 2.2% per year, on average. Since 2022, the average increase has been 4.6%. When pay goes up, it usually stays up, which is one reason some inflation — including food inflation — is “sticky.” The good news is that rising labor costs fatten workers’ paychecks.

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Like ordinary drivers, the food industry has also dealt with higher fuel costs, due in part to disruptions caused by Russia’s invasion of Ukraine in 2022. That raised transportation and production costs. Fertilizer prices spiked due to global shortages and are still elevated. Supply chain disruptions dating to COVID were another factor.

Biden has actually done about as much as a president can to address the root causes of inflation, including the emergency release of oil in 2022 to help lower energy prices and creating a variety of task forces to unclog ports and ameliorate other disruptions. If rapacious greed mongers were ravaging family grocery budgets, we’d probably know who they are by now. Yet the search for villains seems likely to continue until the problem is forgotten.

Rick Newman is a senior columnist for Yahoo Finance . Follow him on X at @rickjnewman .

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