Greedflation

July 1, 2023

Greedflation refers to the situation where corporate greed drives inflation.
Rather than a wage-price spiral, it is a Profit-Price Spiral where companies exploit inflation by raising prices excessively, going beyond covering their increased costs, and aiming to maximize their profit margins.
These further fuels inflation.
Indian listed companies’net profits surged to Rs.2.9 trillion in March 2023, over 3.5 times the pre-pandemic average of Rs.0.83 trillion from December 2017 to Dec 2019, indicating exceptional post-pandemic profit generation.
In India, 60% of the growth in net profit can be attributed entirely to the increase in profit margin. The increase in sales contributed an additional 36% and the rest was a bonus from a combination of the two
This shows the presence of greedflation.