My country has quite an experience with the inflation. It was quite high not that many years ago and even now it's not so small.
We used to see how each time the USD price took a jump, the gasoline price did the same.
But there were periods of time the USD price was calming down, and slowly even falling. Guess what? The gasoline price most often no longer followed the trend.
My point is: inflation was always used an excuse for fatten the profits. It's nothing new really. Basically the new thing is that this time it happens also in U.S. of A.
Topic: Corporations use inflation as an excuse to raise prices and fatten profits - page 3. (Read 394 times)
December 27, 2021, 10:14:12 AM
December 27, 2021, 10:08:40 AM
We could all be living the same reality, cause this is exactly the scenario in my country. Inflation has been a major issue for so many years and we've seen prices of good increase from 100-1000% or even more over the past ten years, greatly increasing the cost of living, without any consideration of workers earning a living wage.
Large cooperations and even smaller ones with no monopoly hike the value of their goods and services during periods of inflation or economic crisis and may of them do not revert back to their previous prices if/when the market normalizes, so years of compounded hikes in prices has created this scenario where goods are grossly over priced, and supply is thinned out.
Large cooperations and even smaller ones with no monopoly hike the value of their goods and services during periods of inflation or economic crisis and may of them do not revert back to their previous prices if/when the market normalizes, so years of compounded hikes in prices has created this scenario where goods are grossly over priced, and supply is thinned out.
Does anyone know which nations followed similar trends and what the eventual results were?
The results here is a massive increase in poverty rate, which results to a somewhat commensurate increase in crime rate.Is inflation on the part of the state responsible for negative financial and economic issues, or do corporations and the private sector bear the burden of the blame?
I would say it is primarily a result of actions from the state, cooperations simply exacerbate an existing situation by using it to their advantage. 
December 27, 2021, 09:57:20 AM
Quote
Consumer prices are going up, but corporate profits are rising even faster.
Walmart, which announced third-quarter financial results this morning, was able to post better-than-expected earnings in part by offering fewer discounts to shoppers, but a lot of large firms have spent their recent quarterly calls bragging to investors about their ability to hike prices with relative impunity.
"What we are very good at is pricing," Colgate-Palmolive CEO Noel Wallace said. "Whether it's foreign exchange inflation or raw and packing material inflation, we have found ways over time to recover that in our margin line."
"We've been very comfortable with our ability to pass on the increases that we've seen at this point," Kroger CFO Gary Millerchip said in October. "And we would expect that to continue to be the case."
Corporations have a tendency to try and boost profit margins during periods of elevated inflation, The Wall Street Journal reported, and now is no different.
Roughly two-thirds of the largest publicly traded US companies have reported better profits this year than the same period in 2019, the WSJ found, citing FactSet data. Nearly 100 of those were performing at least 50% better this year than in 2019.
Former US Labor Secretary Robert Reich called this phenomenon a "symptom" of "the economic concentration of the American economy in the hands of a relative few corporate giants with the power to raise prices."
Inflation may be a problem for consumers, but the bigger issue is a lack of competition, Reich said.
"Corporations are using the excuse of inflation to raise prices and make fatter profits," he said.
American industries have gotten dramatically more concentrated in recent decades, diminishing the number of market competitors and increasing corporate price-taking power.
Corporate pre-tax profits as a share of total US output has also reached a multi-year high of 13.5% in the second quarter, which means that companies are taking an even larger slice of the economic pie. And that number is trending higher.
For example, consumer goods giants Unilever, Proctor and Gamble, and Colgate-Palmolive have remarkably similar portfolios of brands selling similar products, and each reported improved profits from higher pricing in the third quarter. Coca-Cola and PepsiCo also rolled out price increases around the same time.
This is not to say that there is illegal price-fixing going on, but having so few players in the game makes it a lot easier for companies to follow similar strategies.
Even the auto industry, which is pretty competitive compared with other consumer goods categories, is currently navigating its own version of the classic "prisoners dilemma" from economic game theory.
High demand and low supply has allowed most companies to boost profits by offering fewer discounts — a move automakers have wanted to do for decades — but the minute one company starts cutting deals to take market share, the others will soon face pressure to follow.
Input costs are indeed making it more expensive for businesses to provide goods and services, but the healthy profits that companies are taking in show that they're doing just fine as consumers increasingly see their buying power evaporate.
The remedy, Reich says, is not a higher interest rate from the Federal Reserve, which would likely slow down the economic recovery.
"This structural problem is amenable to only one thing: the aggressive use of antitrust law," he said.
https://www.businessinsider.com/corporations-using-inflation-as-excuse-to-reap-fatter-profits-reich-2021-11
Walmart, which announced third-quarter financial results this morning, was able to post better-than-expected earnings in part by offering fewer discounts to shoppers, but a lot of large firms have spent their recent quarterly calls bragging to investors about their ability to hike prices with relative impunity.
"What we are very good at is pricing," Colgate-Palmolive CEO Noel Wallace said. "Whether it's foreign exchange inflation or raw and packing material inflation, we have found ways over time to recover that in our margin line."
"We've been very comfortable with our ability to pass on the increases that we've seen at this point," Kroger CFO Gary Millerchip said in October. "And we would expect that to continue to be the case."
Corporations have a tendency to try and boost profit margins during periods of elevated inflation, The Wall Street Journal reported, and now is no different.
Roughly two-thirds of the largest publicly traded US companies have reported better profits this year than the same period in 2019, the WSJ found, citing FactSet data. Nearly 100 of those were performing at least 50% better this year than in 2019.
Former US Labor Secretary Robert Reich called this phenomenon a "symptom" of "the economic concentration of the American economy in the hands of a relative few corporate giants with the power to raise prices."
Inflation may be a problem for consumers, but the bigger issue is a lack of competition, Reich said.
"Corporations are using the excuse of inflation to raise prices and make fatter profits," he said.
American industries have gotten dramatically more concentrated in recent decades, diminishing the number of market competitors and increasing corporate price-taking power.
Corporate pre-tax profits as a share of total US output has also reached a multi-year high of 13.5% in the second quarter, which means that companies are taking an even larger slice of the economic pie. And that number is trending higher.
For example, consumer goods giants Unilever, Proctor and Gamble, and Colgate-Palmolive have remarkably similar portfolios of brands selling similar products, and each reported improved profits from higher pricing in the third quarter. Coca-Cola and PepsiCo also rolled out price increases around the same time.
This is not to say that there is illegal price-fixing going on, but having so few players in the game makes it a lot easier for companies to follow similar strategies.
Even the auto industry, which is pretty competitive compared with other consumer goods categories, is currently navigating its own version of the classic "prisoners dilemma" from economic game theory.
High demand and low supply has allowed most companies to boost profits by offering fewer discounts — a move automakers have wanted to do for decades — but the minute one company starts cutting deals to take market share, the others will soon face pressure to follow.
Input costs are indeed making it more expensive for businesses to provide goods and services, but the healthy profits that companies are taking in show that they're doing just fine as consumers increasingly see their buying power evaporate.
The remedy, Reich says, is not a higher interest rate from the Federal Reserve, which would likely slow down the economic recovery.
"This structural problem is amenable to only one thing: the aggressive use of antitrust law," he said.
https://www.businessinsider.com/corporations-using-inflation-as-excuse-to-reap-fatter-profits-reich-2021-11
....
According to this, the issue isn't overprinting of fiat currency or inflation. The issue is corporations raising prices to enlarge profit margins. They cite market centralization in some industries as a culprit and suggest anti trust laws against monopolies as the ideal method to break up unethical monopolies and encourage decentralization of the economy. There is another angle mentioned where centralized markets are accused of potential price fixing, which could set the stage for a future proposal of government price controls, gradual shift to a planned economy or stronger state nationalization of the private sector at a later date.
There is a strong precedent for many of these trends occurring in countries outside the united states recently. Does anyone know which nations followed similar trends and what the eventual results were? Is inflation on the part of the state responsible for negative financial and economic issues, or do corporations and the private sector bear the burden of the blame? I hope we can collectively figure out answers to these questions, and determine how to address them before they become too large and devastating to be prevented. The clock is ticking and time is not on our side, unfortunately.
Jump to: