

Greedflation
Corporate Greed is Prolonging Inflation
We wrote about shrinkflation, where companies reduce the size of a product but keep its original price. You know that as the ever-shrinking chocolate bar or the half empty bag of chips. This tactic hides a price hike to the consumers by giving us less stuff for the same price.
It’s sneaky. But it gets worse.
There is now a new term emerging to capture a different perspective on rising prices: greedflation. This is the idea that companies hid price hikes behind the actual inflation. And by increasing their prices by more than inflation, they actually profited from our pain.
But what exactly is greedflation, and how does it differ from traditional inflation? More importantly, does corporate greed contribute to rising prices, or is it an oversimplification of a complex economic problem?
What is Greedflation?
Greedflation is “greed” and “inflation,” implying that companies raise prices not solely because of rising operating costs or increased demand but to maximize profits beyond normal market behavior. In this narrative, companies take advantage of a high-inflation environment to bolster their profit margins.
Where traditional inflation is often attributed to demand (high demand for too few goods) or cost factors (increased production costs, such as higher wages or raw materials), greedflation adds a different dimension. Companies use the ruse of inflation, especially those with significant market power, as a cover to hike prices disproportionately, even when their costs haven’t risen significantly.
How Greedflation Works
Several conditions make greedflation possible and typically occurs in industries where there are fewer competitors. In highly competitive industries, companies are often more constrained by what consumers will pay, but in oligopolistic markets, higher prices are easier to sustain without losing customers.
Greedflation generally looks something like the following:
- Companies blame rising costs, such as supply chain disruptions or increased labor expenses, as reasons for price hikes.
- Rather than matching price increases to actual cost rises, they raise prices more steeply, taking advantage of inflationary times to increase profits.
- Industries that are dominated by a few large corporations makes it easier for companies to maintain higher prices without losing customers.
- Consumers, unaware of how much profit margins have expanded or are unable to easily switch to competitors, end up absorbing these costs.
- While costs may stabilize, companies continue raising prices, reporting higher-than-usual profits during periods of inflation. This suggests that some price hikes are opportunistic rather than cost driven.
For example, Proctor & Gamble (they make popular brands like Tide, Downy, Mr. Clean, Dawn, Swiffer, Febreze, Pampers, Luvs, Tampax, Pantene, Olay, Old Spice, etc.…) reported their profit margins grew 33% in 2023 because inflation let them keep prices high, even as the cost of inputs fell. That is an example of greedflation. General Mills (cereals) and PepsiCo also sustained high prices as input costs fell.
The Role of Corporate Power
Greedflation is linked to the concentration of corporate power. In industries where a handful of firms dominate, such as technology or pharmaceuticals, and consumer staples. For example, Proctor & Gamble makes three of the top four diaper brands in the world. Kimberly-Clark, which also reported strong profit growth during the last few years, has three of the top six.
Two companies effectively control the global diaper market. There is no competition…
When you dig in, you discover that’s the case across many of our daily products. Most of the brands we buy are made by a handful of giant companies. The lack of competition allows these corporations to ignore market forces. They can maintain or raise prices with little fear of being undercut by smaller competitors.
Economists who support the idea of greedflation point to profit margins as a key indicator. In theory, if inflation were driven purely by supply chain or labor cost increases, companies would see their profits either stay flat or shrink. However, recent data shows that many large corporations have enjoyed record-breaking profits during inflationary periods, suggesting they are charging more than necessary to cover rising costs.
For instance, several major food companies saw profits soar in 2021 and 2022, even as they continued to increase prices on consumers.
Similarly, in the energy sector, oil companies reported record profits. They kept gasoline prices high, even as oil prices fell. You can see this in the chart below:

Gasoline prices, the black line, routines rose much higher than oil prices, the red line. However, they never dipped further than oil prices. That’s how oil companies recorded record profits, even when oil prices were falling.
Really, Greedflation?
Not everyone agrees that greedflation is a widespread or significant cause of inflation. Skeptics argue that most price hikes reflect genuine cost pressures, particularly during periods of global economic disruption.
Besides, inflation is influenced by a variety of factors, including supply chain bottlenecks, geopolitical tensions, and monetary policy. It can be difficult to unravel how much of a price increase is due to real cost increases and how much is due to corporate greed.
Implications of Greedflation
The concept of greedflation raises questions about the state of our current market. If companies can manipulate prices, corporate responsibility, and the role of government oversight. If corporations are indeed exploiting inflationary periods to boost profits unfairly, it highlights the possible need for stronger antitrust laws, and regulatory oversight.
Traditional tools like interest rate hikes aim to curb demand, but if corporate pricing drives inflation, rather than demand or cost factors, it blunts the effectiveness of that tool.
The best way to address greedflation is through increased competition in concentrated industries.
The concept of greedflation is debatable. However, it offers the simplest explanation for why some sectors have high prices even after supply chain and cost pressures have eased.
As inflation continues to be a concern, the debate over greedflation will remain in the spotlight. And that’s good. We need to shine a spotlight on fairness in the marketplace, competition, and maintaining a free market.
For the Good,
Michael Nichols
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