Dynamic pricing has been making headlines, with legislators working to pass laws to stop grocery retailers from targeting consumers with personalized prices.

Amid sticky inflation, it’s no wonder this practice has Americans worried.

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Dynamic pricing is the practice where retailers base their prices on changing market trends, such as supply and demand, competitors’ prices and inventory levels (1).

If you think that sounds like the way things already work, you may be right.

Grocery store prices “have traditionally gone up and down — particularly for items such as produce, dairy, meat and poultry — based on fluctuating prices that grocers pay for them,” according to a recent Washington Post report (2).

But the term is used to mean different things. It could be used to mean offering discounts in real time, such as on food that’s nearing its sell-by date. Still, the public often views it as a way for grocers to get more money out of customers.

Doug Baker, the vice president for industry relations for FMI, a trade association representing many grocery chains, told the Post that the term dynamic pricing has become a bogeyman.

“Dynamic pricing unfortunately has been deemed a bad activity — it means you’re only raising the price on me [...] When in the grocery industry, nine times out of 10, dynamic pricing means I have the ability to dynamically change through my day to lower a price.”

Dynamic pricing isn’t necessarily the problem. What is an issue for many is “surveillance pricing,” or “personalized pricing.”

According to Consumer Reports, surveillance or personalized pricing happens “when companies use consumers’ personal data, such as their browsing history, real-time location, inferred family size, or income to set prices or discounts (3).”

These practices have become a focus for lawmakers across the country. New York state lawmakers recently passed a bill to restrict the use of consumer data to set individualized prices, which, according to a release from New York Attorney General Letitia James, “often results in shoppers paying more for essential products (4).”

If Gov. Kathy Hochul signs the bill into law, New York will become the third state to pass a law banning personalized pricing, following Maryland and Connecticut. (5)

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A Consumer Reports investigation from May 2025 found that grocer Kroger was “collecting vast data profiles for individual shoppers, with inferences about their income, family size, education level, gender, and more.” (6)

However, the report notes that Kroger “doesn’t personalize the underlying prices of its products, only the specific discounts it offers its loyalty members.” Those discounts may be based on information other than customers’ previous purchase data, including “demographic or online behavioral data.”

Consumer Reports also published a collaborative investigation in December 2025 on Instacart’s pricing practices that found “consumers were paying different prices for the same products from the same store at the same time.” (7)

Since that investigation, Instacart has said it would end the program that was showing different shoppers different prices to multiple users on its platform. But that, “it would still allow its partners — grocery retailers and food brands — to test different types of promotions and discounts on their customers.”

While New York state passed surveillance pricing legislation, the New York Times reported that “A companion measure that would have banned digital price tags passed the Senate but died in the Assembly (8).”

While consumers may fear that digital price displays in stores are being used to manipulate prices, grocers argue that they are just more convenient technology, “and many in the industry worry that customers have conflated the mere presence of digital labels with nefarious practices,” according to the Post.

Consumer advocates and some lawmakers are wary of just that. Some grocers, however, aren’t using dynamic pricing at all, even if they do use digital displays.

The National Grocers Association, which includes smaller and independent grocers, told the Post that “they are not using dynamic pricing at all, meaning they don’t change prices based on other external factors.”

“Our members’ prices are just based on cost,” Stephanie Johnson, head of government affairs for the NGA, told the Post. “And then sometimes they’re able to give you a discount because you know they got a good deal on something, so they’re able to pass that on, but they’re never changing the prices based on data and algorithmic criteria.”

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Harvard Business School Online (1); The Washington Post (2); Consumer Reports Advocacy (3); New York State Attorney General (4); Grocery Dive (5); Consumer Reports (6), (7); The New York Times (8)

This article originally appeared on Moneywise.com under the title: Dynamic pricing has shoppers up in arms. But it may get a bad rap thanks to prices some grocers set using surveillance

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