Corporations use inflation as an excuse to raise prices and fatten profits

[Poker Player]

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.

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.

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

[Rruchi man]

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

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.

[Wind_FURY]

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.

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?

[Fortify]

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.

The US corporate structure is set up to squeeze as much out of customers as possible in order to hand it over to shareholders. Management who do not pursue this line of reasoning are quickly replaced in most companies. It is inevitable that costs will rise and have to be factored into the costs of products - for example if you are a bottled drinks manufacturer and the price of plastic goes up, you have two options: 1) eat the cost which results in lower profits 2) pass the cost on to consumers. They might take option 1 for a little while but option 2 becomes inevitable over time. It actually makes sense, if you think inflation keeps rising, to tack a little extra on the top so you don't have to raise prices further so soon in future.

[The Sceptical Chymist]

I just don't know what to think about this article.  It's baffling to me.  Obviously Business Insider's aim was to write an inflammatory article, which you know just by looking at the title, but the relationship between corporate profits and inflation seems like it should be a typical thing that happens during inflationary periods. 

In this case, demand and/or the money supply increases so people are buying more things--and that would drive up the price.  At the same time (and as noted by the Colgate-Palmolive CEO) raw materials are getting more expensive, and there's also the issue of global currency fluctuations.  Why wouldn't corporations hike up the prices of the finished goods?  Why does this warrant an article attempting to stir up outrage?

In addition, I'd really love to see the annual report of Colgate-Palmolive from 60 years ago.  I'm betting their quarterly/annual profits were much less in absolute dollar terms than they are in 2021.  If that's true, it seems kind of like how wages have risen over the years and have more or less adjusted for inflation.  My head isn't quite wrapped around the complexities here, but my gut is telling me that the topic of this article is "The rich get richer!!" and Business Insider ought to know that this is all business as usual.

[cafucafucafu]

That's how the economy works for you.

Everyone tries to pass on the production costs, and then some. After all no one is really interested in the greater good.

This is also the reason why inflation was always going to be inevitable and no way in hell was it going to be transitory. It is something that is programmed into how the fiat system is set up from the get-go.

[kryptqnick]

Companies making profit and hiding behind inflation is one of the ugly sides of capitalism. Regarding the question of inflation and corporations, I think the inflation is making money decrease somewhat in value, but then the corporations make it even worse by raising the prices for consumers disproportionately.
I wanted to learn if the same happened in my country, but couldn't because the data on 2021 isn't available yet. From the things I googled, it's common for top supermarket chains in my country to actually report losses, not profits (I'm very unsure about the honesty of such reports), and the one that did report profits, had them increased by 20% in 2020 compared to 2019, but that's not exactly the data I was looking for. Also, a funny thing: in my country, apparently such investigations aren't being made at all, as, when I googled our inflation rate, the top result has shown me a table with numbers, and a message that 'the inflation index' is the same thing as 'the index of consumer prices'. So, basically, it's assumed that the prices are rising exactly in accordance with the inflation rate.

[oHnK]

So, basically, it's assumed that the prices are rising exactly in accordance with the inflation rate.

My thought is so simple, why does the price of goods rise when inflation rises? the answer is the raw materials for production have also increased due to the value of money which is no longer valuable, and the funny thing is that the government when inflation increased during this pandemic did not even increase the minimum wage for workers. As a result, the wages they receive will not be able to meet the basic needs of their families. The current economic system is very cruel for those of us who are poor.

[paxmao]

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.

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.

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

There is something our there called pricing power, and it is one of the forces that Porter describes as the ones that configure the market and the competitive position of the companies. Those companies that enjoy some type of monopoly or leadership in the market that allow price-setting usually have the price already set to the point in which they obtain either maximum profit or maximum market (to deter competence). Those companies that compete in open markets and have saturated markets with little differentiation cannot set the price.

When inflation comes to e.g. the food market which is quite open and has little barriers to entry, it means that traders cannot be greedy as they would simply not sell. This is simply the market in action.

[arwin100]

So, basically, it's assumed that the prices are rising exactly in accordance with the inflation rate.

My thought is so simple, why does the price of goods rise when inflation rises? the answer is the raw materials for production have also increased due to the value of money which is no longer valuable, and the funny thing is that the government when inflation increased during this pandemic did not even increase the minimum wage for workers. As a result, the wages they receive will not be able to meet the basic needs of their families. The current economic system is very cruel for those of us who are poor.

Its domino effect towards that happening and only greedy businessmen gain from this and the one who suffer are those people who live on pay their pay checks so maybe its good for government to take action on this and always monitor on what oligarch does since if they let the rich men run the economy and the government will be their puppet then for sure the economy sinks and poverty will be rampant in the country.

[DrBeer]

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.

At the same time, do not forget - we ourselves will become the final assistant and acceptance of this rise in prices. If we continue to buy an unjustifiably expensive product - who is to blame? Corporations? No, we ourselves, paying our money for an unjustifiably risen product, say "yes, take our money, we like it, raise it more, we'll get it out of our wallets." Why not stop bulk buying such products? There are alternatives anytime, anywhere

[Sterbens]

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.

At the same time, do not forget - we ourselves will become the final assistant and acceptance of this rise in prices. If we continue to buy an unjustifiably expensive product - who is to blame? Corporations? No, we ourselves, paying our money for an unjustifiably risen product, say "yes, take our money, we like it, raise it more, we'll get it out of our wallets." Why not stop bulk buying such products? There are alternatives anytime, anywhere

Since the demand for goods is expected to increase, a company knows that their goods are in great demand so increasing margins makes us inevitably have to pay for them. Although this clearly makes the goods will be more and more hunted. You're right we paid dearly and we love it. If there are other alternatives, it certainly does not mean that the price of an item will have the same quality. Therefore, companies know that the holdings generated by them have a market of their own. Finding other alternatives that fit the criteria is not easy. So we buy their stuff and they will get more demand.

[RealMalatesta]

Its domino effect towards that happening and only greedy businessmen gain from this and the one who suffer are those people who live on pay their pay checks so maybe its good for government to take action on this and always monitor on what oligarch does since if they let the rich men run the economy and the government will be their puppet then for sure the economy sinks and poverty will be rampant in the country.

Governments, or more precisely the politicians that decide on what the government should do, gets paid bribes and that's how oligarchs stay wealthy. They get laws passed for themselves. Just the biggest example is the oil industry, they give money to politicians and then pollute and kill the planet as they wish while the whole humanity hurts because of it whereas they are racking up more profits.

Same with everything else, people end up doing whatever they want to do and end up bribing the politicians for doing it and politicians are not really doing anything about it and that's why I feel like we are not going to see something decent made by the government to protect the people like us who live pay check to pay check.

[Gozie51]

The issue is corporations raising prices to enlarge profit margins.

Rather the real issue is government. Government is the first culprit of the issue not cooperation because they should take order from the government. Therefore if there is proper regulation and monitoring that is devoid of corruption and bribes from defaulters of the regulation , certain issues won't arise . Government has a role to play in getting rates down like taxes and make raw materials cheaper to access and will help cooperations to follow from the regulation. For example, a corruption shouldn't have the right to fix prices of goods they produce above the regulated price, if this happens it will keep cost of living up and inflation will set in. This is just a circle that I believe government has a major role to play and not just printing of money leading to inflation.

[Wind_FURY]

I believe many posters in the topic also have not truly understood that increasing Inflation + Price Controls = longer, deeper and more volatile Economic Depressions. We should research what happened to the Soviet Union.

[stompix]

Hihi, yeah let the blame game begin.
First the pagans than the Christians, the nobility then the kulaks, now it's the century where everything should be blamed on corporations, whatever that category would include.

The most ironic thing in this whole fiasco is that for once the actual inflation is only to be blamed on the or governments themselves, they are the ones who made all the moves with a lot of them pretty bad during the virus waves, and they're the ones with the shifting energy policies that triggered rises in energy prices and the main cause for price increases. But yeah, they need a scapegoat for being morons and of course, bussinesinsider who has turned into a propaganda mouthpiece that is against every free business environment lately is seeking any excuse possible for Biden's government.

Easy solution, let's blame the corporations for failed energy policies and money printing, then use the voting mob to slap them with more taxes, crush them completely, and after a few years be forced to either bail them out or use the entire economy crumble in pieces. History repeats itself over and over, complete with the fact that the morons in charge never learn anything from the previous failure.

[DrBeer]

Hihi, yeah let the blame game begin.
First the pagans than the Christians, the nobility then the kulaks, now it's the century where everything should be blamed on corporations, whatever that category would include.

The most ironic thing in this whole fiasco is that for once the actual inflation is only to be blamed on the or governments themselves, they are the ones who made all the moves with a lot of them pretty bad during the virus waves, and they're the ones with the shifting energy policies that triggered rises in energy prices and the main cause for price increases. But yeah, they need a scapegoat for being morons and of course, bussinesinsider who has turned into a propaganda mouthpiece that is against every free business environment lately is seeking any excuse possible for Biden's government.

Easy solution, let's blame the corporations for failed energy policies and money printing, then use the voting mob to slap them with more taxes, crush them completely, and after a few years be forced to either bail them out or use the entire economy crumble in pieces. History repeats itself over and over, complete with the fact that the morons in charge never learn anything from the previous failure.

This is the "norm"! This is how a person is made. "An ordinary man" - never admits his guilt in what is happening, he will always look for someone who is to blame for his problems! To admit to yourself that you are doing wrong is stupid - this is not for the person making up the crowd. Such entities must necessarily have someone (and not necessarily one) who will be to blame for their problems. Someone is necessarily to blame for the fact that there is no high-paying job, and when you say - what you did not study, did not study the professions in demand, the answer is identical - someone prevented him from getting an education. And so in everything. But it's easier to live this way - your soul is calm that it is not you who are stupid, lazy, afraid of difficulties, afraid not to master simple things, and it is someone who is to blame ...

[Blue0x.com]

This is called deflection.  Inflation is hiding behind lockdowns right now.  When (if) the world goes back to normal, inflation will spike and it will begin to show itself in everyday life.  Right now, money is not changing hands enough for real price discovery.  Assets are in a bubble and commodities are all over the place. Corporations are greedy and of course they will raise prices to match inflation, but they have no idea what their true prices even are yet.

[stompix]

Inflation is hiding behind lockdowns right now.  When (if) the world goes back to normal, inflation will spike and it will begin to show itself in everyday life.  

Not at all.
The lockdown are the ones causing a lot of the inflation, offer, and demand, if you don't have enough poeple working to supply the needs for other poeple you have inflation even without money printing, there is simply no way to avoid it.
So if the wave passes and everyone returns to work a lot of sectors will actually start to see decreasing inflation, some prices might actually start going back as oversupply might kick in. Also in 3 months winter will be gone, in Europe's case, this will trigger a slowdown in demand for gas and fuel, and electricity, coming with higher production from the now zero in the useless solar panels Germany has spent billions on.

Right now, money is not changing hands enough for real price discovery.  Assets are in a bubble and commodities are all over the place.

Nothing to do with common good inflation and price discovery has not that much to do with the velocity of money. The main drives between price discovery are the number of sellers and buyers, we already have these figured out since we have inflation.
If you're mentioning assets then maybe you're talking about valuation over cash flow, but this is of no relevance to inflation in necessity goods.

[Blue0x.com]

Inflation is hiding behind lockdowns right now.  When (if) the world goes back to normal, inflation will spike and it will begin to show itself in everyday life.  

Not at all.
The lockdown are the ones causing a lot of the inflation, offer, and demand, if you don't have enough poeple working to supply the needs for other poeple you have inflation even without money printing, there is simply no way to avoid it.
So if the wave passes and everyone returns to work a lot of sectors will actually start to see decreasing inflation, some prices might actually start going back as oversupply might kick in. Also in 3 months winter will be gone, in Europe's case, this will trigger a slowdown in demand for gas and fuel, and electricity, coming with higher production from the now zero in the useless solar panels Germany has spent billions on.

Right now, money is not changing hands enough for real price discovery.  Assets are in a bubble and commodities are all over the place.

Nothing to do with common good inflation and price discovery has not that much to do with the velocity of money. The main drives between price discovery are the number of sellers and buyers, we already have these figured out since we have inflation.
If you're mentioning assets then maybe you're talking about valuation over cash flow, but this is of no relevance to inflation in necessity goods.

Velocity of money directly inverted at the same rate of money printing.  This is the ONLY reason USD is still afloat.  Once velocity returns to the market and the supply chain is back to normal, the price of goods and services will spike.  Assets are in a bubble because people are trying to dump their fiat before this happens.

https://i.imgur.com/0rANDt7.png