A rarely discussed inflation driver: corporate profits

We routinely delve into the various factors that drive inflation: the rise in cost of raw materials and labor, the cost of energy to make things and the cost of transport to ship them, supply chain issues, and even the War in Ukraine. But there is another factor that is often overlooked: corporate profits. When inflation is high, companies may raise their prices to pass the increased prices they pay onto consumers, without cutting into their own profits. And that's understandable. And, says The New Yorker’s Sheelah Kolhatkar, to be expected – “capitalists will do what capitalists will do.” But sometimes - without us fully registering that they are doing it - companies take advantage of high inflation by using it as cover to mark up products even higher than what would be necessary to recoup their higher costs. Dec. 11, 2022