Instacart’s AI Pricing Strategy Raises Grocery Costs in Texas

Residents of Austin, Texas, using the grocery delivery service Instacart may experience unexpected increases in their grocery bills. An investigation by Consumer Reports, alongside nonprofit organizations Groundwork Collaborative and More Perfect Union, revealed that pricing fluctuations for identical grocery items can reach as high as 23 percent between different shoppers.

The report highlights the concept of algorithmic pricing, often referred to as surveillance pricing. This method employs artificial intelligence and data analysis to tailor prices in real-time based on individual consumer data. According to the findings, nearly three-fourths of grocery items examined offered differing prices to different users, leading to an average price variation of 7 percent for the same items purchased simultaneously from the same stores.

For a typical family of four, these discrepancies could result in an annual expense increase of approximately $1,200, according to Consumer Reports. The investigation drew data from over 400 Instacart users across four U.S. cities, providing a glimpse into how pricing strategies may impact consumers.

Instacart Acknowledges Pricing Experiments

In response to the investigation, Instacart confirmed the findings related to its AI-driven pricing experiments, which were being implemented at ten of its grocery partners at the time. The company described these experiments as “limited, short-term, and randomized tests,” asserting they affect only a small number of its retail partners and aim to align with in-store pricing practices. Notably, grocery chains involved in the pricing assessment include Costco, Kroger, Sprouts Farmers Market, and Target, while H-E-B, a major player in Texas, was not specifically mentioned in the report.

Deidre Popovich, an associate professor of marketing and supply chain management at Texas Tech University, cautioned that Texas consumers relying on services like Instacart may face higher prices and reduced pricing transparency. She emphasized the need for consumers to engage in comparison shopping among various retailers to mitigate the impact of AI-influenced pricing.

Legislative Action and Industry Response

The implications of the investigation extend beyond the grocery aisle into the realm of legislation. U.S. Representative Greg Casar, a Democrat from Austin, introduced a bill in July known as the Stop AI Price Gouging and Wage Fixing Act of 2025. This legislation aims to prohibit companies from utilizing AI to set prices based on personal data, which Casar describes as an exploitative practice.

“Instacart’s AI price-gouging scheme is exactly why I introduced the first bill in Congress to stop surveillance pricing,” Casar stated. He expressed concern over corporations using algorithms to take advantage of working families and underscored the need for consumer protection against such practices.

The National Retail Federation, the largest trade group representing retailers in the U.S., has not publicly addressed Casar’s bill. Nonetheless, the organization has previously attempted to block a New York state law requiring retailers to disclose their use of algorithmic pricing, arguing that such regulations hinder the ability of retailers to offer the best value to consumers.

Stephanie Martz, the federation’s chief administrative officer and general counsel, noted that algorithms are simply tools that help retailers understand customer preferences and improve service. She warned that stigmatizing these technologies could lead to higher prices for consumers.

As the investigation continues to unfold, representatives from the grocery chains involved have yet to provide official comments regarding the findings. Although H-E-B is a prominent presence among Instacart shoppers in Texas, their representatives were also unavailable for comment.

The investigation sheds light on critical issues surrounding pricing transparency and consumer rights in an era increasingly influenced by artificial intelligence. As legislation moves forward, the outcomes could have significant implications for both consumers and the retail landscape in Texas and beyond.