Topic: Corporations use inflation as an excuse to raise prices and fatten profits - page 2. (Read 394 times)

In the United States, do you believe that? It’s very laughable that they’re trying to make a narrative that inflation isn’t the government and the Federal Reserve’s fault. Plus if the issue is with corporations, why is Jerome Powell saying that there’s a need for tapering and to raise rates three times this year?

very correct. Inflation has it's toll on businesses and corporations too, It increases operational cost and to stay in operation and not fold up, these corporations sometimes have to slightly adjust the prices of goods, not necessarily to fatten profit but to maintain profit. Although there is the possibility that some corporations take advantage of inflation to fatten profits, it is not always the case.

Yes, although in the supermarket sector they have more room for maneuver than in others, let's say furniture for example, where if they raise prices a lot and you were thinking of changing furniture you can go years without buying new ones.

With food, you can go to another supermarket, you can buy things cheaper and you can even fast, but in the end you have to buy food much more frequently than you buy furniture.


I was thinking something like that. I don't believe that all private companies are angelic beings either, but in a context of massive currency printing with high energy costs that affect all prices, it strikes me that the focus is on companies and not on government policies that are the main cause of inflation. It may be that some companies in some sectors can take advantage of this to inflate prices, but consumers' money is not infinite. If this were something that companies did across the board, in the end they would be forced to lower prices because people would run out of money immediately and would not be able to buy. With less demand you have to lower the price or you run out of sales.

The money printing is only one aspect of inflation.

This is the more important cause of inflation - which is that there is significant markups (cost-push) and panic buying (demand-pull) in all sectors of the economy, especially in terms of semiconductors.

Not sustainable at all, fiat is going to struggle to outperform any asset class.

From what I heard a CEO in our nation said, it is both a way to make more profit, but also they defend it by saying they do not know what the inflation will be like in the future so they are trying to price that in instead. If you make 100 bucks today for selling something that will be 150 bucks tomorrow, then you basically made a loss. Sure you spent 50 bucks, and got 100 in return, but you could have waited another day and make 150 instead.

Numbers are just made up, of course it is not that much difference, but you get the point, usually it is more like buy for 3.60, sell for 4.20 and rises to 4.40 instead type of deal. So this is their defense, obviously it is a lie, obviously they would still make a profit, it is only important on how much they spent to buy and how much they profit before they sell it, but it is obvious that they do not care about it all that much.

I don't think so, natural resources aren't infinite, well most of them aren't so when that happens, the production of a product that has that problem will increase their prices. Also, corporations will pay more too when the inflation increases, it's just that they have a really good place to fall back when a big crisis comes.

Profit that is the only aim of every company in this world so I won't be surprised if they are still making money no matter the inflation rate increases. But the actual value of the products also increased but not enough demand so big corporates can able to invest and buy them for the cheaper prices but in bulk then they can able to sell them for the current market price.

Something like that assertion only shows a deep lack of understanding of how a market works. Companies worth of that name are there for profit and that is their main goal. If the management does not maximise profit for the shareholder they will be fired and replaced with someone that actually does. The basics are as simple as that, even though there are cases in which management may have enough power to seek their own agenda.

Yes, companies that have pricing power will rise prices as much as they can and that is just how capitalism works. If you want to change that, change the laws and change the system... and good luck doing that in the US particularly.

The source is probably written by some political activist with no understanding of economics.

Inflation calculators do not use singular entities in order to calculate inflation. They're not using the price of individual products from individual companies, and comparing the price year over year. The inflation calculation occurs over entire sectors, averaging out the increase in prices. Is it coincidence that the inflation rate for nearly all developed nations increases the moment economies are shut down and an indefinite supply of money is injected into the economy? Nonsense.

For the inflation crisis to be the fault of corporations, you would need to see entire sectors collude with each other, including many corporations, to raise their prices collectively. That's not how things work.

The government will tell you its corporate greed causing inflation because it causes you to demonize free market economics and capitalism. They will do anything to shift blame away from themselves in causing an inflation crisis because the sad truth is, most people will believe corporations are responsible for the higher prices. After all, it's the corporations that determine what their products will cost, correct? The answer, of course, is no, it is a free market that determines the prices. And in a market with too large a demand due to increased money supply, the prices of the products increase.

I think the statements of Former US Labor Secretary Robert Reich are trying to pay attention to a symptom or a side effect of a disease, not a disease. Corporate profits have increased due to monopoly and centralization, but if inflation rates do not rise, companies will not find a motif in the increases.
In addition to the uncertainty, freight price increase, economic war, supply chain problems and others, many companies will find an opportunity to increase their prices, but where is the government role, especially in times of fluctuations that need some interventions.

Companies are guilty, but blaming them without focusing on economic problems is unrealistic.

Inflation is always good for the rich and always bad for the poor.
I can change that saying a little bit by saying that inflation is always good for the big corporations and always bad for the small businesses.
There was a theory in macroeconomics,called "theory of rational expectations"(I don't know if I remember the name correctly). According to this theory,if everyone in a society is talking about inflation and expecting a price increase,the inflation will happen for sure.This is like a self fulfilling prophecy,because all the companies will use these expectations as an excuse to increase the prices.It doesn't matter whether or not they have a legit reason to increase the prices.
All the big US corporations bragging about fat profits won't keep bragging forever,because the prices of raw materials,energy and labor will have to increase as well.
  

But don't forget that the real value of the dollar profits also affected by inflation. It's possible, even with the increased profit margin, the real value of USD profits falls below what stated years ago. But I think the inflation problem is deeper than just raising prices. For example, with such goods scarcity and economic instability, small businesses tend to go bankrupt quicker than big corporations, thus eliminating competition, and in the end, reflected on accounting report: good sales, fat profits, etc.

In this case, the best example is a group of small stores in your area. If you have a cheap price, the other stores will usually follow. If you have a higher price, they will still follow. They are just talking about the price because they don't want customers to go to the cheapest one. Because there is a lot of demand and they are the only store, there are times when they talk about raising the price because the customer doesn't have a choice. When prices go up, even though they bought them at a lower price, the demand goes up so that they can make a lot of money.

It is impossible for a company to increase prices at will without excess market power, perhaps because it monopolizes the market, unfair competition, and government support.  Usually this happens in countries that free the private sector to carry out their activities in the market without being controlled by the government.  The impact of inflation is not only due to financial stability problems but also the market itself.  Inflation is not always bad when referring to fiat glasses because the indicator of economic growth is inflation that is maintained.  This is proof that it is impossible for the time value of money to increase as it always decreases.

I think this is how these corporation using the advantage of inflation to raise the prices of basic goods without any consideration to raise the minimum wage of the workers. It makes the poor becomes poorer so working your entire life isn't enough to rise from poverty I think. One should have a legit business and use that advantage too but the consumer would have to suffer too but that's how reality works if you won't buy they don't have a problem as long as someone didn't offers a decrease of price. But most of the time they are using the promo like n% off to attract customers yet it's just basically the normal price since they start and you aren't getting less just because of the promo.

Seriously, these corporations are part of the problems that we are having. Every little thing that happens, they start increasing the price of every product, and the most annoying part of all these things is that once they up the price they never bring it down again, it just stays that way, and things would keep getting expensive.

They always look for every opportunity for them to up the price of their products, and apart from that one they would also go ahead to reduce the quantity and quality of their products, which is the one that annoys me a lot. It’s really high time they start the price controlling thing on these corporations, seriously.

Your vendetta against corporations is misguided.

If the prices at Walmart are too high, then you can simply shop elsewhere. Nobody is forcing anybody to shop at Walmart. Profits are high because people continue to choose to shop at Walmart, even as they raise prices.

I don't know now, but, at least when I was living in the US 8 years ago, that wasn't my experience at all. In fact, it was quite the opposite: corporations (especially wal- mart) would avoid rising prices like the plague.
Now in Argentina, everybody will use ANY excuse (real or not) to hike prices. The result is prices that are at least 3 times higher (in USD) than anywhere else, sometimes a lot more.

I think we need to accept that businesses/corporations wouldn't change anything if they are profiting from it. So if raising prices to enlarge their profit margins is the way for them to make more, you can bet that it would continue. So it's the behavior of the people in charge in the corporations are the culprit. I think that's why monopolies shouldn't stay in power for too long because they can have that power. Or if the monopoly practices the decentralization applications of any types, then it could set a standard towards the economy.

I think this is the reason why stocks are rising as well in price because the general trend that we have, if we based on historical data too that the reason for inflation is wanting to profit more by businesses and every other thing will follow.

I believe all the developing nations are having the same issues. For example when I talk about my native country : India, the government does not just fail to handle corruption but at the same time they are unable to keep their currency at a stable rate. Poverty, pollution, education to name a few a lot of money is passed from the central government but at the end what the net profit for the people is even less than 1%, that makes these issues worse which causes problems with the crime, literacy, keeping the poor people in the web of poverty, the rich gets richer and the poor gets poorer. The printing is not a major issue, they have been discussing if it would be a good idea, therefore the government is literally not able to balance anything and the inflation is rising drastically. According to the state it can be 5-5.2% from the next year which is so much worse!! Right now it's around 6% and a healthy inflation rate should only be around 2%.