Corporations are a lot more willing than usual to raise their prices lately, and it’s putting more of the burden of high inflation on consumers.
That may not come as much of a surprise to anyone who has browsed a grocery aisle, kicked the tires at a car dealership or filled up a gas tank of late, but even the Bank of Canada is starting to take notice of the trend, as the central bank continues its battle to wrestle inflation into submission.
Speaking to a parliamentary committee in Ottawa this week, the bank’s governor, Tiff Macklem, told lawmakers that the bank has noticed a troubling new trend coming out of the corporate sector.
For much of the past few decades, any time businesses have seen a jump in their input costs — the amount they pay for things like raw materials, energy and even workers — “they were pretty cautious about passing on [that cost into] the prices they charged for goods and services,” Macklem said.
Their reasoning was simple: they were afraid of losing customers.
Yeah I’m not buying the claim that corporations have ever been any less than 100% willing to raise prices as much as they can.
There’s definitely been more aggressive price raising since COVID started since I think businesses discovered that they can push it a lot further than before.
Yes exactly. They discovered that they (now) can push it a lot further than before. Their desire to isn’t new; the opportunity is.
So the question is, what changed about the businesses’ environment that allows them to raise prices?
In my worldview these two are big factors:
- Pandemic lockdowns killed lots of businesses. Business assets and market share were consolidated as big survivors swallowed the remains of small failures. “Failures” is a bit harsh considering the circumstances; I only mean it in the technical sense: not able to continue, so they sell.
- Pandemic lockdown mitigation in the form of huge quantities of cash pumped into stock market created a huge pool of cash in rich peoples’ portfolios, and over time it seeps into the active economy diluting the value of money
I’m a lot more willing not to buy their overpriced products.
Shockingly, when you don’t come down hard enough on price gougers during a global pandemic, the rest of pf buisnesses get the idea you’re unwiling to punish anyone for price gouging.
It’s unspoken collusion amongst publicly traded companies is what it is. Instead of competing against each other on price, they have all just been price jacking for profits and in today’s corporate world of massive companies that all own a dozen subsidiaries there’s no new competition for virtually anything that can come in and start competing with lower prices, so there’s no fear of being undercut by a new player and they’re all happy to all raise prices and keep most of their customer base instead of trying to compete against whatever tiny handful of companies are in their sector to expand their customer base.
Just look at home appliances. Whirlpool owns the Jenn-Air, Maytag, Amana, Roper, and KitchenAid. There’s only a few other major corporations that make appliances and they’re all publicly traded companies that have all raised their prices well over inflation.
It’s a bad trend. I suspect a lot of times when a business raises prices, it is a long overdue increase so that tends to make the increase more. If it’s a lot of work to raise prices they probably raise them a lot now so they won’t have to do it again in X months.
That boot leather is addictive for some. They raise them as far as the market will allow constantly. In the last few years they’ve been testing the hell out of it.
the definition of inflation is too much currency going after too few goods, all of this blaming the companies or the workers shows the hand of the writer not understanding basic capitalist economics. so the writer is most likely either ignorant or a shill
One of the products we use at our business is going up about 25-30%
We are locked in to contracts that last 3-5 years. We will be eating that cost for awhile now.
for the 20 years leading up to 2022, corporate profits were responsible for about one-third of inflation. Last year, however, that ratio jumped to two-thirds, which means that despite legitimate increases in their cost of doing business, their take-home share of every consumer dollar effectively doubled.
Record profits everywhere - except for employees and consumers.
Advice for consumers for much of the past year has boiled down to either trying to cut back on expenses, or increasing income, but Stanford says it’s misleading to put the onus on consumers to solve inflation, since they’re the ones bearing the disproportionate burden of it.
