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Isn't this classic price fixing? All my competitors are raising their rates so it's ok to do the same.

Anyone notice that gas stations used the raise in prices and thus their rates to the credit card companies as a excuse to charge different prices for gas, but once the price went down (and thus their rates) continue to charge 10 cents more for credit.

The company owned ones dont do this, but just about all the independents around here still are.

Well, then the airlines and grocery stores can just get used to me not buying plane tickets or buying less food.

@snowmoon: It's not price fixing unless the companies collude to raise their prices together.

@dlayphoto: How long have you worked for SmartyPig? :)

@snowmoon: No, it's not:

Price fixing is an agreement between business competitors to sell the same product or service at the same price.

If they collude to fix prices, communicating with each other to make an actual agreement, then it's illegal. If it just so happens that they all arrive at similar prices, then it's not price fixing, it's a fortunate coincidence for them.

What I'm waiting for is the price of electricity to go down... I'm wondering if the same "sticky pricing" goes for them too.

Don't expect my grocery bill to shrink?

Don't expect me spending tons of money on brand new useless crap like i used to either. I am saving now.

Screw you VISA.

I disagree with the article. There is always some lag in changing consumer prices when commodity prices change. That doesn't mean the prices are permanent. Someone will lower the price of a can of corn 10 cents and the price war will be on.

@OletheaEurystheus: Fix that by voting with your dollar. Or by notifying the credit card companies about the guys doing this. It's a violation of their merchant agreement.

@OletheaEurystheus: The gas station at the end of my street charges 13-15 cents more per gallon for a credit card purchanse. I refuse to give them, or any gas station that charges more for credit, my business. I drive 2 miles more out of the way to get gas at a station that does not do this... and the price for everyone where is cheaper than the credit price at the other one... Though it's about 5 cents more per gallon than the cash price.

I was the one who submitted this article. I am not at all surprised at it. Companies will try to keep prices up for as long as they can. They've already got us conditioned to pay more anyway.

If one company drops their prices, others must either follow suit or lose business, but there's no motivation really to drop your prices if you are priced competitively and still make a decent profit margin. It becomes a waiting game to see which company will take a chance and lower prices first.

Speak with your wallets people!!!! Don't pay for a crappy plane trip and fees when you know the price should be lower and don't buy that bag of oreos you don't need. We all knew that the prices weren't going to come down anyway. I am sure by the end of the week companies will have a response to this articles and give some crap reason as to why the prices won't go down or why that can't "unshrink" their product sizes.

Once a company raises prices, it has very little excuse to lower them back down because it will actually be harder to raise them a second time.

It seems like it would be easier to keep prices the same and wait until the price raise evens out.

I'm just visiting the local market a lot more often for fruits and veggies. I'm given up chicken, can't justify the cost. Been off of red meat for a while.. never liked pork. The spike in grocery prices hasn't affected me that much because I've changed how I eat. Local sourcing isn't just for green nuts, it works for us cheapos too :)

@InfiniTrent: depends on how they spin it. They actually can charge more as long as they dont call the cash price a "discount."

@Canino: Yeah, sooner or later the temptation to outsell the competition becomes irresistible. I don't know if prices will go back down to previous levels, but they will go down.

Last 3 times I've been shopping the prices have been the same. I only shop once a month....of course raman and beer prices don't change that much.

The grocery store will then have to get used to me buying from the local market and looking for other non-retail ways of buying the stuff I need. Such as shopping online (craigslist, ebay) and buying slightly used items instead of brand new ones from the store, thrifting whatever I can that isn't overpriced in the thrift, and yard sales.

Funny how one farmers market near me expanded its store in the recent 2 years and business is up exponentially at it, there used to be 1-2 cars in the parking lot every time we went now there are 20 or more.

"...And in case you're wondering if the same applies to airfares... the answer is yes. Don't expect the airlines to let go of any of those new fees without a fight."

In Canada, WestJet dropped their surcharges once oil fell, and has promised to keep it this way so long as oil stays below $100/barrel.

Well, one thing worth noting is that this is often the time when resellers can recoup their losses. When prices go up for resellers, there's usually a decrease in profit because they are paying more for the item and fewer people are buying it at the higher price. So when prices drop, they take a while longer to drop with them to recoup those losses and ultimately, sell at what the market value of the item is. It may seem cheap, but, y'know, even the folks at Stop and Shop need to buy groceries too.

Watch for sales. This is how they will lower the prices. They know you can only buy so much and when its over you will say "Hmm that was good" and buy it at the now price.

I turn on my Freezer next month. I shop hard for 2 months and little on the other 10.

The increased profit margins delivered by lower fuel prices will far exceed the hit in reduced sales from the higher price...more profit, less product to produce, handle, package and ship...it's a gold mine!

@GZA: Soon I'm going to have to travel 1300 miles for a funeral. I won't get notification several days in advance, so driving or taking the train is out of the question. How would you propose I get there?

I don't fly unnecessarily anymore, but sometimes we have no choice. And the airlines know that.

Bastards. I never really believed the gas prices were entirely to blame for raised prices. In fact, prices at my local grocery store are still going up. I just buy less now, and I'm actually enjoying the challenge. For example, I used to make a lot of salads, but I realized how expensive it was--lettuce, tomatoes, croutons, bacon bits, salad dressing. I just started buying frozen vegetables, for a dollar a bag, and it's saved me a lot of money each week.

I really miss salads though.

@OletheaEurystheus:

Other way around. They can call cash a "discount" all they want. They can't control that. But merchants are not allowed to say there is an additional FEE to use credit. THATS the part they can't do.

@OletheaEurystheus: I guess I don't see a problem with this. Around here when they do it the "credit card" price is always competitive with the stations that don't differentiate so I don't get the feeling I'm being gouged for using my credit card.

We all know that CC companies charge retailers something per transaction so to me it almost looks like a gas station with different cash/cc prices is saving money by taking cash and *gasp* passing some of those savings on to the customers.

@trk182: I support this as a way of avoiding the rising prices! The price of Gross Bottled Water goes up, but the price of Delicious Bottled Beer stays the same!

Feh, suits me. I'm mostly going for canned goods now, and I won't buy them unless the sale makes them the same price they were. I usually buy $40-$50 of a canned item when it's on a good sale, so I now have about 4 or 5 months worth of canned goods in stock.

The companies only have the power to charge prices like this as long as people are dumb enough to buy them at that price. When I run out of the canned goods, I'll move on to something else that's cheap (probably generics).

If everyone did what I'm doing, 1 month of no profit would be enough for companies to lose the attitude towards pricing. But, no, there's enough stupid people out there that will pay $1.99 for a can of Beefaroni (priced at my local "cheap" grocery store). *sigh*.

The saying goes: "Price gouging doesn't happen when the prices go up. If it happens, it happens when prices are going down!"

I'm not surprised at all. Bastards (I'm pointing fingers on retailers and some wholesalers) are quick on raising prices, but slow to lower them when market prices go down.

@GZA:

Seriously, Oreos and Vacation are one thing and make a nice rhetorical package for you.

But what about food (to cook at home), gas (to drive my kid to her daily hospital visits) and so forth? I can't simply refuse to feed my child because I believe the price of food should be lower. Starting a farm in my non-existent backyard is simply not an option.

@snowmoon:

No, it is not price fixing unless the companies directly communicate their intentions to one another. There are many ways companies communicate implicitly without breaking the law. There's a special subset of economics called Industrial Organization and Game Theory that deals with how companies signal intentions to one another.

As far as airfares go, it's worth noting that some airlines are locked in at high oil prices - notably, Continental decided to buy a boatload of hedges at $140/barrel.

@shepd: If everyone did what you were doing there would be an incredibly high demand on that product, either causing it to go out of stock or increase dramatically in price. If everyone did what any single person did, there would probably be serious problems.

@TorrentFreak:

I'm confused as to what this article had to do with credit cards.

@RedwoodFlyer:

yea, but southwest is still somewhere around ~50 a barrel I believe (have no idea how they pulled that off). AA is pretty well off last I heard hedging somewhere around the 80s. But yea, some airline companies screwed themselves.

The price of food only really affects those who are much more limited in what kinds of food they can buy.

Just as a lower-income family may rely more on canned goods, with a combination of perishables such as bread and milk, my family relies more on fresh produce such as vegetables, meat and perishables, and less on canned goods, though we do have a lot of canned goods. Lower-income families not only have less money to spend on food (canned vegetables or frozen vegetables are always cheaper than fresh vegetables, unless there's some kind of huge sale), they also presumably have less time in which to cook.

For those who cook mainly with fresh ingredients, or mixed with canned or frozen ones, if prices of canned corn go up...I'll just buy a different brand or I won't buy it until I have a coupon or there's a sale. For a lot of lower-income people, those options aren't there. Presumably, there's less time in which to cook and shop around, and more limited options. They buy what they can afford, and when grocery companies price gouge and raise prices, it hits lower-income people, or those on severe budgets, the hardest.

@Zulujines: Do you have a local produce market in your area? I found one in my neighborhood that buys from local farmers and their produce is cheap, cheap, cheap!

If you skip the bagged salads and buy your own fresh lettuce and veggies, skip the croutons and bacon bits (more healthy that way, anyway) and make your own salad dressing (a little olive oil, red wine vinegar and some Italian spices is great), you can still do salad on the cheap. :)

@Kimaroo:

Do you really think your state public service/energy commissioners (who get a hefty kickback from energy companies) are going to demand a reduction in energy costs.

Really? If so, I want some of what you are smoking.

@ilves: Actually, I remember when Southwest bought that contract (IIRC, $48/barrel) that everyone thought they were nuts because the "Oil Bubble" would pop and it'd be back to $25 a barrel in notime. Turns out to be one of the most forward thinking corporate actions in a long, long time. And like Redwoodflyer said, Contenental is well and truly screwed at this point.

These sticky prices have to do with most food companies having hedged or locked in their ingredient costs for at least a portion of 2009, some of it at the higher prices that we saw earlier this year. Their margins are already razor thin as it is, so I would expect them to try and keep the higher prices. On top of a weakening credit market the industry is on thin ice, I don't expect them to knock down prices until the last half of the year.

@Zulujines: A bag of three romaine hearts is about $3, and tomatoes are about $4 if you buy a bunch on the vine... Or you can get diced canned tomatoes.

There's no reason to skip salads (a perfectly reasonable healthy meal) if prices can come down for you. As MadameX said, croutons and bacon bits aren't healthy, and they're probably the most expensive of the ingredients you buy for your salads. Salad dresses can be made on the cheap, or you can buy your favorite in bulk or wait for a sale on your favorite.

@InfiniTrent: Thats sort of how pricing works on everything.

To make things worse I have noticed items being no longer offered. Sams Club used to sell Colavita olive oil in a big bottle. They quit selling that and carried some brand I had not heard of and was nowhere near as good. Now they carry no olive oil except the cooking grade crud in the plastic bottles.
Our local grocery chain has been gradually discontinuing the no-nitrate processed meats. They have a few crappy very expensive brands in the freezer instead. I am guessing it cost too much to carry something that only a few people buy.

Our electricity is still supposed to keep going up this winter, so is our natural gas. So we are doing everything we can to insulate, get daytime sun for heat, anything to stave off using the furnace until we absolutely have to.

@JeffMc: I just know when I hit the ATM for my monthly spending cash I take out an extra few twenties for my gas. I will happily go to cash-only or cash-discount places that are cheaper. Hopefully they will continue to offer it if it is popular.

@nsv: I fully understand that. Sometimes you have no choice. I am just saying that in some cases you have to cut back to have your message heard. For example I live five hours away from Chicago and we like to go there for short trips. Sometimes we would pay for the cheap flights to go their but now we just suck it up and drive.

Global warming has diminished grain harvests by 40 million tonnes so far. That's part of your grocery prices too, you know. [www.telegraph.co.uk]

When I shop at Safeway I am very careful to pick items that are on sale for a significant savings. Like 20-50% savings. If it's stuff I buy all the time I stock up. If not, I skip it or just buy one if I really really need it.

$4.50 for a box of breakfast cereal? No way! I'll wait until they are buy one get one free.