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:
This is frightening. We can’t let this carry on can we? pic.twitter.com/VTC7bXbQxS
— Adil Ray OBE (@adilray) April 19, 2023
Claudia Webbe puts the situation – and the reason for it – in a nutshell:
The price of food rose at the fastest rate in more than 45 years in the 12 months to March 2023. Food inflation is now at 19.2%; one in six adults (16%) in Britain are now classed as food insecure.
Meanwhile food corporations are raking in billions. It’s a profit greed crisis
— Claudia Webbe MP (@ClaudiaWebbe) April 19, 2023
Now read this:
Last week Tesco announced it made £3,000,000,000 in profits over the past 2 years.
Today food price inflation hit 19.1% – the highest in nearly 50 years.
The soaring cost of your supermarket shop is their obscene profits.
— Zarah Sultana MP (@zarahsultana) April 19, 2023
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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