According to Paul Hannon of The Wall Street Journal, most economists believe profits have played a larger role in the post-COVID-19 inflationary episode than during the period of inflation that had occurred in the 1970s, although the issue of precisely to what degree has proven controversial and a point of contention.
[2] Organizations and notable people that have expressed concern about inflation alleged to have resulted from outsized or unusually high corporate profits include the International Monetary Fund (IMF), the European Central Bank (ECB), Federal Trade Commission (FTC), Isabella Weber, Paul Donovan, and Robert Reich.
[10][11] Economists and politicians argue that the market concentration that occurred in the early 21st century in some major industries, especially retailing, has given companies the ability to wield near-monopolistic pricing power.
[12] Isabella Weber and Evan Wasner say firms with a lot of market power in consolidated industries can raise prices under the cover of inflation as a form of implicit cartel-like coordination.
[24] Ernie Tedeschi argues that every realistic economist would agree that in the short-run, there is not perfect competition which can lead to higher profits due to consumers being less informed than the businesses but does not believe the effect is large or lasting.
[13] The FTC and several state attorneys general in February 2024 sued to block a proposed $25 billion merger between large grocery chains Kroger and Albertsons, arguing the deal would reduce competition and likely lead to higher consumer prices.
[33] Eric Levitz argues that windfall taxes are worth pursuing regardless of whether greedflation is a major factor or not, as it would incentivize producers to invest in expanding production (which takes pressure off of prices) instead of giving out dividends to shareholders.
[42] In the words of Paul Hannon writing for The Wall Street Journal in December 2023, "[t]here is broad consensus among economists that the role of profits in fueling inflation is one feature of the recent inflationary episode that made it different from the 1970s.
"[2] In July 2023, The Economist criticized the entire concept of greedflation as "nonsense" and argued that rising prices are not due to "greedy companies" but are a natural result of supply and demand issues caused by the cash infusion to the economy which took place during the COVID-19 pandemic.
Therefore the above claim is false given by its unsupported argument[44] In 2022, several economists stated that while price gouging could be a minor contributor to continuing inflation, it is "not one of the major underlying causes" that started this surge.
[50] ECB economists found in May 2023 that businesses were using the surge as a rare opportunity to boost their profit margins, finding it was a bigger factor than rising wages in fueling inflation during the second half of 2022.
[54] An IMF study published in June 2023 found that rising corporate profits accounted for almost half of the increase in euro area inflation during the preceding two years.
[2] An analysis published in early 2024 by the White House Council of Economic Advisers found that U.S. grocery and beverage retailers had increased their margins by nearly two percentage points since the eve of the pandemic, to the highest level in two decades.
President Biden and others asserted that shrinkflation, a practice of reducing portion or quantity sizes of packaged foods while maintaining the same price, was keeping profit margins higher than usual.