{"id":10509,"date":"2023-04-23T13:25:11","date_gmt":"2023-04-23T13:25:11","guid":{"rendered":"http:\/\/lonecandle.com\/?p=10509"},"modified":"2023-04-23T13:25:11","modified_gmt":"2023-04-23T13:25:11","slug":"prices-at-the-supermarket-keep-rising-so-do-corporate-profits","status":"publish","type":"post","link":"https:\/\/lonecandle.com\/?p=10509","title":{"rendered":"Prices at the supermarket keep rising. So do corporate profits."},"content":{"rendered":"\n

\n\n“Food companies say their price increases merely reflect how much their costs have gone up due to \u201cinflationary pressures,\u201d<\/a> like higher labor costs, transportation delays, and capacity issues, or the higher price of grains and animal feed. Yet inflation in 2022 outpaced the rise in wages<\/a> in most industries, and the prices of many agricultural commodities have come down<\/a>.<\/p>\n\n\n\n

The eyebrow-raising spikes at the grocery store can only partly be blamed on manufacturers\u2019 higher costs. The inflation narrative offers the perfect jumping-off point for companies to raise prices, and major food manufacturers are taking advantage of the moment to boost their profits.<\/p>\n\n\n\n

The proof? Look at just how rich companies have gotten since the start of the pandemic.”<\/p>\n\n\n\n

…<\/p>\n\n\n\n

“\u201cCorporate profits have hit their highest level ever, and corporate profit margins \u2014 how much they\u2019re making on each unit that they\u2019re selling \u2014 have hit the highest level in 70 years,\u201d said Chris Becker, senior economist at the Groundwork Collaborative, a progressive economic advocacy organization.”<\/p>\n\n\n\n

,,,<\/p>\n\n\n\n

“Why are corporate profits so high at a time when regular people feel increasingly strapped? Because a small number of players have gobbled up most of the food chain. Cargill and just three other agribusiness companies control about 70 percent of the world\u2019s agriculture market, according to Oxfam. Brands like PepsiCo, Nestle, Mondelez, and Conagra produce and market the vast majority of the offerings<\/a> found in US grocery stores.<\/p>\n\n\n\n

\u201cWe look at the supermarket shelf, and we might be buying tea, cereal, whatever it might be, and we think, \u2018Oh, I\u2019ve got a real offer of choice here on the product I want to buy,\u2019\u201d Ahmed, of Oxfam, told Vox. \u201cFrankly, it\u2019s an illusion of choice, because so many of those products are actually owned by the same company.\u201d<\/p>\n\n\n\n

Grocery retailers, too, have become increasingly consolidated.”<\/p>\n\n\n\n

…<\/p>\n\n\n\n

“Evan Wasner, a University of Massachusetts-Amherst economist who authored a recent paper on companies\u2019 price-setting power<\/a> with economist Isabella Weber<\/a>, said that companies tend to raise prices when they think they won\u2019t see a huge backlash \u2014 like when everyone else is hiking prices, too. \u201cIn a sense, economy-wide cost increases act as a kind of coordinating mechanism which allows firms competing with one another for market share to safely raise prices together,\u201d said Wasner.”<\/p>\n\n\n\n

…<\/p>\n\n\n\n

“Market dominance makes the supply chain more brittle, too, because it means there are just a few vulnerable points for failure. Last year\u2019s baby formula shortage<\/a> is an example of how dangerous the results can be. Just two US companies control about 80 percent of the market, which meant that when one manufacturing plant shut down, the entire nation struggled to buy baby formula.<\/p>\n\n\n\n

Becker blames the vulnerable state of supply chains in part on market deregulation over the last several decades, which has enabled companies to cut corners. In the 1980s, the growing popularity of \u201cjust-in-time\u201d inventory systems, where companies order just the amount of inventory needed right now without a buffer, allowed companies to become more efficient. That has meant lower prices for consumers, usually, and higher profits for companies \u2014 until a crisis hits, and suddenly there are shortages and supply bottlenecks.”<\/p>\n\n\n\n

…<\/p>\n\n\n\n

“Transcripts of corporations\u2019 recent earnings calls illuminate that they\u2019re well aware of their power right now. Groundwork has been collecting highlights from corporate earnings calls on its website<\/a>. \u201cThey\u2019re saying a lot about cost increases and supply shocks, but they\u2019re also saying it doesn\u2019t matter,\u201d said Becker. \u201cWe do have these higher costs that we\u2019re paying, but we have so much pricing power, we\u2019re so capable of passing all these prices on to consumers, that it doesn\u2019t matter.\u201d”<\/p>\n\n\n\n

…<\/p>\n\n\n\n

“Becker echoed that the current economic orthodoxy on how to fix inflation<\/a> \u2014 to rein in Americans\u2019 ability to spend money by attempting to raise unemployment levels \u2014 should be questioned.<\/p>\n\n\n\n

\u201cI would say that we have this really toxic narrative out there that the only way we can get inflation under control is to throw a bunch of people out of work,\u201d said Becker. \u201cLarry Summers recently claimed that we would need 10 percent unemployment<\/a> [for one year], which is about 11 million jobs lost, to get inflation under control.\u201d<\/p>\n\n\n\n

\u201cWe\u2019re going to try to solve a cost-of-living crisis by making people poor or losing their jobs? I think that\u2019s crazy,\u201d he continued.<\/p>\n\n\n\n

What will break the cycle of not just inflation, but of consumers having to pay ever-higher prices for essential goods while the world\u2019s food producers become richer? Experts offered several potential solutions. One is stronger antitrust laws and improved enforcement of preventing and breaking up monopolies. Anti-price gouging laws are another tool in the arsenal. Oxfam, for one, has been a vocal advocate of a windfall profits tax<\/a> on food corporations. \u201cIt\u2019s a tax on those corporations which are raising prices substantially in excess of costs,\u201d Ahmed explained. The fact that it would raise tax revenue is great. But \u201cfundamentally, it reins in companies\u2019 monopoly power and disincentives corporate greed.\u201d Other countries already have similar measures in place. Spain expects to raise about $6.39 billion from its windfall tax<\/a> on energy companies and banks.<\/p>\n\n\n\n

\u201cCorporations are really making profits on the backs of consumers and households,\u201d said Becker. \u201cLet\u2019s tax those windfall profits \u2014 and let\u2019s do something with that money.<\/p>\n\n\n\n

\u201cThere\u2019s nothing that really stops corporations right now from just doing whatever they want.\u201d”\u00a0<\/p>\n\n\n\n

https:\/\/www.vox.com\/money\/23641875\/food-grocery-inflation-prices-billionaires<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

“Food companies say their price increases merely reflect how much their costs have gone up due to \u201cinflationary pressures,\u201d like higher labor costs, transportation delays, and capacity issues, or the higher price of grains and animal feed. Yet inflation in 2022 outpaced the rise in wages in most industries, and the prices of many agricultural commodities have come down.
\nThe eyebrow-raising spikes at the grocery store can only partly be blamed on manufacturers\u2019 higher costs. The inflation narrative offers the perfect jumping-off point for companies to raise prices, and major food manufacturers are taking advantage of the moment to boost their profits.<\/p>\n

The proof? Look at just how rich companies have gotten since the start of the pandemic.”<\/p>\n

…<\/p>\n

“\u201cCorporate profits have hit their highest level ever, and corporate profit margins \u2014 how much they\u2019re making on each unit that they\u2019re selling \u2014 have hit the highest level in 70 years,\u201d said Chris Becker, senior economist at the Groundwork Collaborative, a progressive economic advocacy organization.”<\/p>\n

,,,<\/p>\n

“Why are corporate profits so high at a time when regular people feel increasingly strapped? Because a small number of players have gobbled up most of the food chain. Cargill and just three other agribusiness companies control about 70 percent of the world\u2019s agriculture market, according to Oxfam. Brands like PepsiCo, Nestle, Mondelez, and Conagra produce and market the vast majority of the offerings found in US grocery stores.<\/p>\n

\u201cWe look at the supermarket shelf, and we might be buying tea, cereal, whatever it might be, and we think, \u2018Oh, I\u2019ve got a real offer of choice here on the product I want to buy,\u2019\u201d Ahmed, of Oxfam, told Vox. \u201cFrankly, it\u2019s an illusion of choice, because so many of those products are actually owned by the same company.\u201d<\/p>\n

Grocery retailers, too, have become increasingly consolidated.”<\/p>\n

…<\/p>\n

“Evan Wasner, a University of Massachusetts-Amherst economist who authored a recent paper on companies\u2019 price-setting power with economist Isabella Weber, said that companies tend to raise prices when they think they won\u2019t see a huge backlash \u2014 like when everyone else is hiking prices, too. \u201cIn a sense, economy-wide cost increases act as a kind of coordinating mechanism which allows firms competing with one another for market share to safely raise prices together,\u201d said Wasner.”<\/p>\n

…<\/p>\n

“Market dominance makes the supply chain more brittle, too, because it means there are just a few vulnerable points for failure. Last year\u2019s baby formula shortage is an example of how dangerous the results can be. Just two US companies control about 80 percent of the market, which meant that when one manufacturing plant shut down, the entire nation struggled to buy baby formula.<\/p>\n

Becker blames the vulnerable state of supply chains in part on market deregulation over the last several decades, which has enabled companies to cut corners. In the 1980s, the growing popularity of \u201cjust-in-time\u201d inventory systems, where companies order just the amount of inventory needed right now without a buffer, allowed companies to become more efficient. That has meant lower prices for consumers, usually, and higher profits for companies \u2014 until a crisis hits, and suddenly there are shortages and supply bottlenecks.”<\/p>\n

…<\/p>\n

“Transcripts of corporations\u2019 recent earnings calls illuminate that they\u2019re well aware of their power right now. Groundwork has been collecting highlights from corporate earnings calls on its website. \u201cThey\u2019re saying a lot about cost increases and supply shocks, but they\u2019re also saying it doesn\u2019t matter,\u201d said Becker. \u201cWe do have these higher costs that we\u2019re paying, but we have so much pricing power, we\u2019re so capable of passing all these prices on to consumers, that it doesn\u2019t matter.\u201d”<\/p>\n

…<\/p>\n

“Becker echoed that the current economic orthodoxy on how to fix inflation \u2014 to rein in Americans\u2019 ability to spend money by attempting to raise unemployment levels \u2014 should be questioned.<\/p>\n

\u201cI would say that we have this really toxic narrative out there that the only way we can get inflation under control is to throw a bunch of people out of work,\u201d said Becker. \u201cLarry Summers recently claimed that we would need 10 percent unemployment [for one year], which is about 11 million jobs lost, to get inflation under control.\u201d<\/p>\n

\u201cWe\u2019re going to try to solve a cost-of-living crisis by making people poor or losing their jobs? I think that\u2019s crazy,\u201d he continued.<\/p>\n

What will break the cycle of not just inflation, but of consumers having to pay ever-higher prices for essential goods while the world\u2019s food producers become richer? Experts offered several potential solutions. One is stronger antitrust laws and improved enforcement of preventing and breaking up monopolies. Anti-price gouging laws are another tool in the arsenal. Oxfam, for one, has been a vocal advocate of a windfall profits tax on food corporations. \u201cIt\u2019s a tax on those corporations which are raising prices substantially in excess of costs,\u201d Ahmed explained. The fact that it would raise tax revenue is great. But \u201cfundamentally, it reins in companies\u2019 monopoly power and disincentives corporate greed.\u201d Other countries already have similar measures in place. Spain expects to raise about $6.39 billion from its windfall tax on energy companies and banks.<\/p>\n

\u201cCorporations are really making profits on the backs of consumers and households,\u201d said Becker. \u201cLet\u2019s tax those windfall profits \u2014 and let\u2019s do something with that money.<\/p>\n

\u201cThere\u2019s nothing that really stops corporations right now from just doing whatever they want.\u201d”<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[13],"tags":[1264,993,725,1529,1316,1407,1839],"class_list":["post-10509","post","type-post","status-publish","format-standard","hentry","category-article-share","tag-companies","tag-corporations","tag-food","tag-grocery-stores","tag-inflation","tag-prices","tag-profit"],"_links":{"self":[{"href":"https:\/\/lonecandle.com\/index.php?rest_route=\/wp\/v2\/posts\/10509","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lonecandle.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/lonecandle.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/lonecandle.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/lonecandle.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=10509"}],"version-history":[{"count":1,"href":"https:\/\/lonecandle.com\/index.php?rest_route=\/wp\/v2\/posts\/10509\/revisions"}],"predecessor-version":[{"id":10510,"href":"https:\/\/lonecandle.com\/index.php?rest_route=\/wp\/v2\/posts\/10509\/revisions\/10510"}],"wp:attachment":[{"href":"https:\/\/lonecandle.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=10509"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/lonecandle.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=10509"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/lonecandle.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=10509"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}