Greedflation: companies are fuelling inflation by overcharging us to build profit

French protesters have stormed the Paris stock exchange: will greedflation prompt the British to do worse?

Whenever the Conservatives tell us wage increases are driving inflation, be aware that they are lying.

Inflation isn’t being driven by wage demands but by greedy companies that are using the cost-of-living crisis to drive up prices and boost their profits.

Take a look at the degree by which food prices have risen:

Claudia Webbe puts the situation – and the reason for it – in a nutshell:

Now read this:

That is what the International Monetary Fund and the European Central Bank seem to have discovered, according to The Guardian:

The IMF and the ECB wouldn’t put it in these terms, of course, but both support the idea that companies are gouging their customers when they can. The non-technical term for what is going on is greedflation.

Companies [are] doing rather better out of the cost of living crisis than workers… The flipside of steeply rising prices but only modestly higher wages [is] that profit margins [have] “surged”.

Unite, one of the UK’s biggest unions, published a report in March that blamed systematic profiteering across the economy for fuelling the cost of living crisis. Energy companies, supermarkets, shipping companies, car dealers and food manufacturers had all cashed in on drought, war, and strong demand after the pandemic to “push prices and profits through the roof”.

The eurozone’s central bank looked at the contribution of profits to inflation over nearly a quarter of century, and found that between 1999 and 2022, profits were responsible for one-third of the inflation rate on average. In 2022 alone, profits contributed to two-thirds of the rise.

But whereas the ECB – from its president, Christine Lagarde, downwards – is fully exercised by the threat posed by greedflation, policymakers in the UK seem far more relaxed. There have been plenty of calls for wage restraint, most notably from Andrew Bailey, the governor of the Bank of England, but far fewer for price restraint… Price controls, of the sort used in the 1970s, are seen as to be avoided at all costs.

Instead, inflation is being controlled by increasing interest rates – which sucks demand from the economy and reduces pressure for wage rises by incurring job losses (meaning that, once again, too many jobseekers end up competing for too few jobs and the bosses can pay whatever they want).

But workers who have taken pay cut after pay cut for more than a decade are close to breaking point and something has to give way soon.

Will we see scenes like what has happened in France over pensions, with protesters storming bastions of capitalism like the stock exchange and trashing it? Will we see worse?

It’s a good question. The British have very long tempers and have put up with a lot – so much, in fact, that nobody knows what they might do if those tempers snap.

It seems likely that, if they do not moderate their own rhetoric and curb corporate greedflation soon, the Tories might find out.

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4 thoughts on “Greedflation: companies are fuelling inflation by overcharging us to build profit

  1. Chris Sterry commenting

    Supermarkets have for years been restricting payments to food producers to an extent many are not able to exist as they are farming at a loss.

    Supermarkets say this practice of theirs is to lower the costs to the consumer, but is it as more lowering of prices could be done by not making excessive profits for their shareholders and CEO salary and bonuses.

    Suppliers of equipment to the NHS inflate their prices as they believe the NHS will pay it, while the NHS should be using their great buying power to reduce these costs.

    No one is looking out for the majority of the UK population, especially those that are extremely vulnerable with disabilities and poor health where the cost of living hurts the most.

    The government any government are just looking out for themselves and not the UK population, especially those with disabilities and poor health. If they were welfare benefits would be more substantial.

    The basic tax threshold is way too low as is the national living wage for it is not a wage to live on. To make it more so the basic tax free threshold should be tied to the national living wage as should many of the benefits.

    Another major problem is the total insufficient funding of Social care which is very close to disappearing and causing concerns in the NHS. If nothing is done both social care and the NHS will disappear for most of us. Then we will be back to pre 1948.

    As I am approaching 74 I won’t be around much longer so I won’t see the destruction of the UK.

  2. The Toffee

    Eggs – up 28%

    WHERE? I’ll stock up! Everywhere I look they’ve almost doubled in price. Doubled plus some in some shops. Those figures for ALL the items are total bollards.

  3. Tony

    I do hope that Claudia Webbe will stand at the next election. She will not win but she could get a reasonable vote.

    1. Mike Sivier Post author

      Looking at the local election results for ex-Labour candidates, would you like to revise that prediction?

Comments are closed.