I’ve never suggested that nominal prices will remain constant. NEVER. I have consistently maintained that purchasing power will remain constant when the Fair Tax is implemented. The Fair Tax changes the point at which the tax is collected. To the extent that your purchases exceed the poverty level, everyone will pay tax out of their gross pay. The question, properly framed, compares purchasing power pre-Fair Tax and purchasing power post-Fair Tax.
Removing the embedded taxes cannot possibly raise the nominal pre-tax price of an item. Your suggestion that “Many things will actually cost more per item after you account for your dreaded embedded taxes. So MANY things will now cost 1 - 10 % more after removing the embedded taxes than they do now” is nothing short of absurd. Simply removing a component of cost cannot increase the nominal price of the item.
If suppliers and retailers did not reduce prices in response to market forces, Wal-Mart would be a failure.
There's your problem. If food is one of your major expenditures then the FT will hit you harder than a household with no kids - especially in a Sate that does not now sales tax unprepared food. Even if you account for the prebate. A mother of 4 teenage boys will never buy into the FT since she does not want a adjusted gap increase in her food costs. There is no way the purchasing power will stay the same. Virtually everyone is different.
It took years for Wal-Mart to break into the food industry. Why? Because of the way food is distributed. They have taken lower margins on food than a traditional GS and some suppliers have stopped doing business with them. Their ability to buy meat has been hurt because of their practices - for example.