Inflation and “corporate greed” in the Eurozone

Eurozone companies increased their prices by far more than the inflation-related costs of their operations, writes the portal Wyborcza.biz.

“Since we started to feel the price increases in our pockets, the search for those responsible for inflation began. And a rhetorical scuffle: some people talked about put inflation, others blamed social spending for the price increase. But neither of them was absolutely right factors have influenced the price level, but are not the main culprits.

Above-average corporate profits and inflation

So what is responsible? No, the author of the text does not write about the printing of fiat money by authorized banks. However, it draws attention to another important factor. This according to herabove-average corporate profits account for 45% of price increase” – we read in the text entitled “As some tightened their belts, others rubbed their hands. There are indications that inflation was driven by corporate greed.”

Significantly, this is admitted by the International Monetary Fund, which is known for siding with entrepreneurs rather than critically judging them, but now it admits: Euro area companies have raised their prices much more than their operating costs. ie adjusted for inflation) earned 1% more, while the purchasing power of employees’ salaries fell by 2%.

IMF: Macroeconomic policies must remain restrictive

“The pockets of entrepreneurs – which, despite the three-year panic-mongering about the crisis, after generous subsidies from governments during the pandemic, were not at all empty – were filled extra. Employees, on the other hand, became empty. So they increasingly turned to their superiors for wage increases to regain lost purchasing power and earn more.

We also read that according to the International Monetary Fund, if inflation is to return to the euro zone’s inflation target, companies will have to agree to lower profits, and allocate part of that to salaries. “And instead of raising prices again to compensate, just accept the loss of profit. It would be a nice change for the employees. Finally, they don’t have to grit their teeth” – writes the portal.

In practice, if the price-wage spiral does not stop, this could mean that corporate profits fall to their lowest level since the mid-1990s. pre-pandemic levels.

Source: Do Rzeczy

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