![]() ![]() University of Michigan economist Justin Wolfers says corporate greed is a red herring and companies are not the source of inflation. That is powerful evidence that a lot of the higher prices we are paying in the store are just the higher cost of raw materials being passed along by manufacturers and retailers. Wholesale prices (the cost of the raw materials companies buy to make the stuff they sell to us) are up more than 8% over last year, compared with consumer prices, which are up 7.7% over last year. They've been rising at about the same rate as the prices we've been paying in stores.Īctually a bit more. Prices of raw materials have been rising all year. Of course, every suspect needs an alibi, and in the case of inflation, corporations have some pretty strong ones.įor one thing, companies really have seen their costs rising. Meat companies have settled lawsuits over price-fixing just this year and a proposed merger between grocery giants Kroger and Albertsons has raised concerns that it will mean higher prices for many consumers. That kind of consolidation can mean companies don't have to compete as much for our business and there's less pressure to keep prices low. that control about 80% of the beef and poultry market. CEO Andrew Callahan had this to say: "We're also seeing the consumers experience a lot of disruption, and they haven't fully recognized or absorbed pricing."Įt tu Twinkies? Murder on the competition expressĪdding to the case against corporations is a lot of the consolidation we've seen in corporate America over the last 40 years.Ĭase in point: There are four companies in the U.S. Hostess has seen profits jump more than 15% this year. CFO Jamere Jackson called inflation "a little bit of our friend in terms of what we see in terms of retail pricing." On a recent call with investors, Mabud heard CEO Rodney McMullen say, "We view a little bit of inflation as always good in our business and we would expect to be able to pass that through."ĪutoZone, which sells car parts and accessories, saw earnings jump 13%. Grocery giant Kroger has earned billions in profits over the last couple of years. ![]() Mabud has sat in on dozens of corporate earnings calls and says she often hears CEOs bragging about how much they were able to raise prices. backs of families who are all really struggling to get by," she said. "Companies are taking a spoonful of sugar off the. Rakeen Mabud is chief economist for the progressive think tank Groundwork Collaborative. It begins to seem like all of this corporate crying about rising costs might be a case of crocodile tears, as companies jack up prices for all of us. If companies are struggling with costs and supply chains so much, where are all of these billions in profits coming from? Many companies saw profits hit record highs. First, corporate profits: They reached an all time high this year. ![]()
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