Greedflation

Still feeling the pinch of rising inflation? Or maybe the prices have remained the same, but the sizes gotten smaller?

Economists say inflation is now cooling but the perceptions are not quite there. We still remember the pain of increasing prices and people are looking for presidential alternatives.

Fortune magazine has reported that a new study has come out – the largest one yet – detailing the real cause of inflation: a newly coined term greedflation. It’s a story about companies getting greedy and jacking up prices greater than the cost increases the companies themselves are seeing.

“…shoppers in 2022 might have wondered whether corporations were doing everything they could to keep prices down as inflation hit generational highs. The answer now appears to be a resounding no.

A joint study by think tanks IPPR and Common Wealth found profiteering by some of the world’s biggest companies forced prices up significantly higher than costs during 2022.”

Fortune, “The biggest study of ‘greedflation’ yet looked at 1,300 corporations to find many of them were lying to you about inflation”, Ryan Hogg, 12/8/2023.

I think the typical inflation reasons still apply: supply chain bottleneck caused by COVID-19 when people were out sick and/or dying and people were ordering more stuff online; the Russian war with Ukraine caused depletion of supplies; energy prices rose, again due to the Russian-Ukraine war, which cascaded down the supply chain.

It looks like Biden was right when he said that the inflation was caused by corporate greed.

We are still mired deep in the profit maximization world of Milton Friedman.

“In April, Société Générale economist Albert Edwards released a scathing note saying he hadn’t seen anything like the current levels of corporate greed in his four decades working in finance. He said companies were using the war in Ukraine as an excuse to hike prices in search of profits.

“The end of Greedflation must surely come. Otherwise, we may be looking at the end of capitalism,” Edwards wrote. “This is a big issue for policymakers that simply cannot be ignored any longer.” “

Fortune, “The biggest study of ‘greedflation’ yet looked at 1,300 corporations to find many of them were lying to you about inflation”, Ryan Hogg, 12/8/2023.