Greedflation

This is EXACTLY what I’ve been saying for 2 years. If people don’t like it when I say maybe if they read an NPR article it will register.

https://www.npr.org/2024/09/09/nx-s1-5103935/grocery-prices-inflation-corporate-greedflation

Executive Summary:
- surging demand coupled with stock outs
- pandemic supply issues and Ukraine war
- increase labor costs
- profit margins only increased maybe 1%
- supply and demand issues lead to price increases.



First came the crush of shoppers stockpiling groceries to prepare for lockdowns, right as operations slowed at meatpacking plants and transportation companies. Shipping bills skyrocketed. Workers fell ill; firms shelled out money for acrylic shields at cash registers and for other anti-coronavirus measures. Prices surged for commodities, such as wood pulp for diapers. Later, Russia's invasion of Ukraine disrupted global food supplies, particularly grains, vegetable oil and fertilizer. Avian flu, floods and droughts led to spikes in the prices for eggs, oranges and chocolate. Through it all, an exodus of workers from lower-paying jobs led companies to push up wages that had been stuck for decades.

Researchers at two Federal Reserve Banks — those based in Kansas City and New York — say this is a key driver of higher grocery prices. Pay for workers in food manufacturing and retail rose a bit faster than pay for workers in many other occupations. A report from the Federal Reserve Bank of Kansas City noted that processed food, which requires more labor, accounted for the vast majority of price hikes.


Companies' financial disclosures cover global operations, meaning lots of variety in costs and prices. But for almost all companies that NPR analyzed, between 2018 and 2023 the margins either declined or grew less than 1%. "Even though profit margins for grocery stores have gone up," he wrote in a July report, "the increase appears to be only a small contributor to the rise in food prices relative to the increase in their operating costs."


Then there's the fact that people have been spending big on groceries, even as they shop less at other stores. And that's on top of an unprecedented surge in spending in recent years — first as people received pandemic relief checks and then as wages grew in many jobs. "If supply is fixed and the buyers suddenly have more money, then prices are going to rise — and that's kind of what happened," said Ian Shepherdson, chief economist at Pantheon Macroeconomics. "There genuinely was an increase in costs, but then there was this extra margin on top. So the question is, how on earth did [retailers] manage to get away with that? That to me is the big issue."