In 2022, as inflation soared to generational highs, consumers were left scratching their heads at the checkout line. A recent study by think tanks IPPR and Common Wealth reveals that the blame might not rest solely on supply chain issues and global crises. Instead, it points a finger at the world’s biggest corporations, accusing them of profiteering and driving up prices in a phenomenon known as “greedflation.”
Inflation rates hit near 11% in the eurozone and above 9% in the U.S. last year. While the COVID-19 pandemic, Russia’s invasion of Ukraine, and subsequent energy price hikes certainly played a part, the study suggests that corporate greed was a significant contributor.
The research, which analyzed 1,350 firms across the U.S., the U.K., Europe, Brazil, and South Africa, found that company profits rose by 30% between 2019 and 2022, outpacing inflation. In the U.K., 90% of profit increases were concentrated among just 11% of publicly listed firms. In the U.S., a third of publicly listed firms were responsible for most of the profit increase.
Energy giants like Shell, Exxon Mobil, and Chevron, along with food producers such as Kraft Heinz, were among the biggest profiteers. These companies capitalized on the shift away from Russian oil and gas and the impact of the Ukraine war on global grain supplies and fertilizer prices.
This study echoes findings from a June report by the International Monetary Fund (IMF), which attributed 45% of eurozone inflation in 2022 to domestic profits.
Despite the evidence, many CEOs have blamed inflation and rising input costs for their own price hikes. Albert Edwards, an economist at Société Générale, criticized this corporate greed, stating, “The end of Greedflation must surely come. Otherwise, we may be looking at the end of capitalism.”
As inflation begins to stabilize, some companies are now seeking to repay customers with price cuts. Ikea, for instance, plans to spend $1.1 billion to absorb inflation and reduce prices. Walmart CEO Doug McMillon also hinted at a potential price contraction, or “deflation,” in company stores.
This study serves as a wake-up call, highlighting the role of major businesses in driving up inflation. It’s a reminder that, in the face of global crises, corporate responsibility should not be overlooked.
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