According to the Bureau of Labor Statistics' latest report, prices are up 7.7% over last year. While officials have pointed to numerous causes for the decades-high inflation, a new report suggests that part of the blame should be placed on greedy corporations fighting to keep prices high.
While overall inflation is currently sitting at 7.7%, prices for other items, such as gas, rent, and some food, are rising at a much faster pace.
The most common causes brought up when it comes to inflation are the war in Ukraine, which was responsible for pushing oil prices to record highs, and government spending and aid programs, most notably COVID-19 stimulus checks and student debt forgiveness.
But one cause that is often last to be named is the corporations that continue to profit while Americans suffer, and a new report from the House Oversight Committee looked to examine just that.
Despite companies citing supply chain issues and high costs for the increase in prices for the goods they sell, many continue to turn a profit.
The committee’s report cited a poll that found 80% of registered voters think corporations “raising prices to make record profits” is a major cause of inflation.
"Companies are taking a spoonful of sugar off the ... backs of families who are all really struggling to get by," Rakeen Mabud, the chief economist for Groundwork Collaborative, said to NPR.
Mabud shared that she has been on dozens of corporate earnings calls, and more often than not, she hears CEOs bragging about how much they have been able to jack up their prices.
On a call for grocery company Kroger, Mabud said she heard CEO Rodney McMullen say, "We view a little bit of inflation as always good in our business, and we would expect to be able to pass that through."
Other companies to see jumps in profits include AutoZone, with a 13% earnings jump, and Hostess, with a 15% increase. Mabud said that top executives at both companies talked about inflation and rising prices, with one calling it “our friend.”
But even though economists like Mabud have placed blame on corporations for their practices and profits, economists like Justin Wolfers from the University of Michigan say that corporate greed is only a red herring.
"My friend and economist Jason Furman says, 'Blaming inflation on greed is like blaming a plane crash on gravity,'" Wolfers told NPR. "It is technically correct, but it entirely misses the point."
While companies are always looking to charge as much as they can, Wolfers said the only reason we aren’t all paying astronomical prices for everything is because of the greed of competition.
"That greed forces them to offer low prices because they're trying to muscle out their competitor," Wolfers said.
Companies have two main expenses, raw materials, and wages. With wages having increased 5% compared to last year, the divide between how much people are getting paid and how much things cost remains wide, as inflation sits at 7.7%.
While typically, the money should go back to wages, Wolfers said that bosses are instead keeping the profits.
"What's happening in the interim is there's a bit of money that we might hope should go to workers," Wolfers explained. "But it's staying in the boss's pocket instead."
With wages expected to rise, Wolfers said that corporate profits should start to come back to normal levels, but one area many are still uncertain about is inflation.
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