COVID and Price Gouging. What Does it Mean?

Like most people, I have recently been impacted by the rapid and continued spread of the coronavirus. Lately, in the rare moments I have actually been able to leave my house, I have noticed a lot of basic items missing from grocery stores.I guess that is to be expected in an unprecedented global pandemic. But when certain items aren’t missing from stores, the prices are through the roof, particularly on items that are the most necessary in these times of need. Items like hand sanitizer, paper towels, and disinfectant wipes have seen exorbitant rises in price. 

Although these prices are swayed by the inevitable rules of supply and demand, and demand for cleaning supplies has risen overnight (the toilet paper though - I still don’t get it) the new prices mean that around the world, people can’t get what they need to stay safe and healthy during these times. And this only works if we all work together. 

In extreme cases, local merchandisers, “mom and pop” type shops, and even major retailers have been accused and charged with price gouging. Price gouging refers to when a seller raises the price of an item to something deemed unreasonable or completely unfair. It occurs primarily in times of emergencies and natural disasters. Although it does have the economic benefit of readjusting the demand curve, it is widely considered to be unethical due to the apparent profit made off of a crisis. 

It seems that every day there is a new story about the radical cost of everyday items, but I personally didn’t feel the shock until I saw a single roll of toilet paper on sale for $15 USD at my local grocery store. What does this mean for families who have always struggled with making ends meet? Or for the families that have been economically impacted by the coronavirus. 

$15 toilet paper is just the beginning. What felt radical to me wouldn’t even be extreme enough to warrant a caption in a news article. Instead, the headlines about price gouging which I have seen recently refer to packs of disposable wipes selling for hundreds, a $107 bottle of Purell hand sanitizer, and a 350% increase in price for needed medical supplies. On the one hand, I understand companies’ desires to raise prices in order to meet the new demand for these goods. Many of these large corporations which manufacture cleaning products likely did not expect to find themselves at the epicenter of a pandemic, or to feel the burden of being responsible for public health and safety. As much as we need to consider the health needs of the general population, we must also recognize that the corporations we rely on are also impacted. That being said, I believe many consumers would agree that some increases in price are going to be expected. But when merchants begin doubling and tripling the prices of basic and common items, the lines of what is an acceptable price increase will be blurred. Not only is it highly unethical, particularly so when a crisis impacts the whole world but in some places it is illegal. Although no U.S. federal laws forbid it, it is considered illegal in times of emergency. Similarly, in Australia, there are no rules against profiting off of temporary supply and demand shifts, however, the Australian government has recently banned price gouging during COVID on items like personal protective gear. 

So what can we do about it? If you see something that appears to be price gouging, there are many local grassroots and government agencies dedicated to stopping unethical pricing (For example U.S. PIRG). And if you are a business owner who is responding to the crisis, we wish you the best of luck! We urge you to keep in mind, however, that it is unsure how the economy will respond to this crisis. Consumers will always vote with their dollars, and a decision made now that seems unethical may not be forgotten or forgiven in the future.