Greedflation

If the senior director of pricing saying they were doing it isn't enough, what would be sufficient evidence?

 

uhh….that’s why they are called non-profit?

2023 revenue was 150 billion. net income was about 1.5% of sales.

 

sufficient evidence of what? That they increase certain prices, because they can?

The price of eggs not withstanding the bottom line does not show a pattern of profit spiking price gouging.

 

One would hope so as they are a for profit company…

 

Think you meant called for profit…

 

No actually meant non profit - a non profit has net income of zero, so of course a for profit company will (hopefully) have more than zero.

I wasn’t clear if that was supposed to be sarcasm or not.

 

the solution to high prices is high prices?

 

My error.

I miss read the post you quoted..

 

Yes, sarcasm.

 

At least If the items aren't necessities it seems so. Of course that is a bit oversimplified since we aren't considering production, distribution costs and other variables.

 

Sure. There is a reason we look at aggregations of data and not one single company.

Corporate Profit Margin (After Tax) was 9.65 as of 2024-01-01, according to Bureau of Economic Analysis. Historically, Corporate Profit Margin (After Tax) reached a record high of 10.71 in 2021 and a record low of 4.1 back in 1986, the median value is 6.47.

During the Trump years it hovered just under 9% and been just under 10% during Biden's.

The value of the difference in those red lines is nearly $1 Trillion in price increases for profit. Where do you think that came from?


Corporate Profit Margin (After Tax) Charts, Data (gurufocus.com)

United States Corporate Profits (tradingeconomics.com)

 

At least $200 billion came from big oil companies, who profits are largely determined by worldwide market prices. And that isn’t the entire energy sector.

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There are probably other such examples.

I only brought up Kroger because somebody posted a quote that they intentionally increased the price of eggs as if this is a smoking gun of *greedflation*.

IMO this is a completely manufactured issue. It’s a fake issue. It’s supply and demand.

 

Egg market is run by crooks. This is pre-covid.

Egg suppliers ordered to pay $17.7 million by federal jury for price gouging in 2000s

The jury found that the egg suppliers exported eggs abroad to reduce the overall supply in the domestic market, as well as limited the number of chickens through means including cage space, early slaughter and flock reduction, court documents say.

Jurors were specifically told not to consider more recent changes in egg pricing during their deliberations.

Food manufacturers joining as plaintiffs in the lawsuit against the egg producers are Kraft Foods Global, Inc., The Kellogg Company, General Mills, Inc. and Nestle USA, Inc. The jury found the egg suppliers who participated in the conspiracy were Cal-Maine Foods, Inc., United Egg Producers, Inc., United States Egg Marketers, Inc. and Rose Acre Farms, Inc., a southern Indiana-based company previously chaired by Rust.

 

$17 million. Really?

 

I know right? They were fixing prices in good times.

Look, there are a lot of moving pieces. Its like pegging down global warming. But there is no doubt, as you can see by the graph I put a few posts up, the corporate world raked in $1T in profits from higher profit rates each year over the last 3-4 years. That is $3-4Trillion in aggregate price increases. I feel like that is really meaningful.

 

It certainly is non trivial, but I don’t view it as something nefarious. For people such as yourself arguing that supply issues caused a great deal of the inflation (and you aren’t wrong) it is inconsistent to then decry companies that adjust prices due to those supply issues, and those adjustments can cause price increases and even higher profits.

As a general rule companies should charge whatever they can in order to maximize profit. Not doing so can lead to shortages.

A 1.7% increase in profit margin is significant but that isn’t likely a huge piece of the overall excess inflation over the past few years.

I’m on record for being for a modestly higher corporate income tax.

 

The CPI covers about 60% of the GDP, so annually $15T. If $750B is price increases from profits you are talking about 5% inflation each year on top of normal inflation. Even if you do it on the entire $25T GDP you are talking 3% inflation increase from profits on top of normal inflation. Either way it's really meaningful.

 

Since this seems to have evolved into a sub discussion. My go to sub is Harris Teeter here in the Raleigh area of NC. They pile it full and have tons of veggies. Wife and I can get two meals each out of a footlong club.

 

NPR analysis of the question of greedflation, suggests an unsatisfying but likely best answer: it’s complicated.

The Biden administration has been eager to blame corporate greed. But even a report that the White House put out this year acknowledged that store markups don't fully explain food inflation.

"It's very difficult to tease out what's going on," said Tedeschi, who's now at the Budget Lab at Yale University. "It's not — I want to emphasize — dispositive proof that there is anything anti-competitive going on. That is one explanation, but there are lots of other explanations."
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Are greedy companies to blame for grocery inflation? We looked at the data