Inflation or margin improvement?

[fdcg27]

We've all noted rapid and substantial increases in the pricing of goods we buy every day.
Looking at some of the price increments that seem well in excess of currency inflation over the past couple of years, I wonder how much of the higher prices we're paying is a result of actual wage/price inflation and how much of it represents improvements in margins at every level from production through retail sale?
The rationale given is always along the lines of "well...inflation" and to some extent that is certainly true, since everything does cost more in nominal dollars, from materials to transport to labor.
My question is how many levels of the supply chain are using this inflationary environment to raise prices beyond any inflationary impact with inflation used as an excuse to increase margins?

 

[slacktide_bitog]

It's greed, evidenced by the soaring profits.

If it really was just inflation, they would be hurting, and less profitable.

 

[PimTac]

Anything is possible. Some companies use shrinkflation along with higher prices so you get a double whammy.

 

[Dave Hess]

A little bit of everything.

Don’t forget a global supply chain has us at the mercy of folks overseas.

 

[Leo99]

It's greed, evidenced by the soaring profits.

If it really was just inflation, they would be hurting, and less profitable.

If people pay the price, it's not wrong for them to charge it.

 

[JeffKeryk]

It's both. Inflation is real; the causes are many.The 2 biggies were longtime low interet rates (cheap money) and then the pandemic knockout blow (economic disruption). The good news is, we are experiencing a soft landing which many felt was not possible. But there is a long way to go.

Margins, profits, greed... Are big profits good? Depends on which side of the deal you are on. I love my cars but big oil profits are through the roof, and the world runs on oil. Car dealershp MSRP gouging.

People like to quote Adam Smith in "Wealth of Nations" speaking of self interest being a driver of a healthy economy. Certainly true. But Smith also believed that humans develop as they become properly socialized. Smith's moral system is based on sympathy.

Smith argued there is a difference between self-interest and greed. Today we live in a highly complex economy.

 

[ekrampitzjr]

The great egg "shortage" was a device to raise eggs from about $0.80/dozen in late 2021 to nearly $6.00/dozen by early this year. Those are Lidl prices for the standard large white eggs, and Lidl is a bargain chain similar to Aldi. Some mom-and-pop grocers were pushing $8.00/dozen. Not by coincidence, egg producers just happened to report record profits for last quarter 2022–first quarter 2023 before various politicians began making noise about investigating the situation. There were also suspicious fires at poultry and egg facilities during that time that "just happened" to kill a bunch of laying hens. Imagine that.

Once the government started making noise about egg prices, those suddenly dropped over a few weeks and are in the $2.50/dozen range at Lidl. Imagine that.

Before that there were claims of a dairy and butter shortage looming last fall that never materialized, but prices at some grocers briefly shot up anyway after producers tried to raise prices. Imagine that.

The supply chain issues have been sorting themselves. My employer gets container deliveries from Japan, and those are nearly back to their normal transit time to the US now. But lo and behold, the vessel shipping costs remain at much higher levels. Imagine that.

Then we have "incident" after "incident" that all just happen to raise fuel prices again just when they begin dropping. Remember (for one) the explosion at the refinery? Of course those were all coincidences. Imagine that.

 

[Cujet]

Unfortunately, inflation has taken quite a bite out of my finances. I'm now running into overdraft every pay period. The bank conveniently takes money from my retirement account.

I'm working on reducing expenses. I've found a very good way to do that is to use Costco instead of Publix. The prices at Publix are often double. Not to mention the shrink-flation issues with grocery store products. Higher price, 6 instead of 8. Ugh.

 

[skyactiv]

Humans are greed driven. Becoming wealthy and making money is being glamorized at levels never seen in the past.

In reality, we were skating on thin ice before the pandemic. The pandemic made it happen faster but made it much worse.

 

[Passport1]

Humans are greed driven

A capitalist economy is driven by greed. Humans are driven by envy.

 

[eljefino]

I'd throw in the mix that we've had enough corporate mergers over the last decade that we're really getting into oligopolistic behavior. They raise their rates then ask, who else are you going to buy from?

I'm doing my absolute best to lay low and buy as little as possible. I don't like rewarding bad behavior.

 

[GMFan]

A mix of supply chain chaos, fuel costs, labor costs with a heavy dose of opportunistic greed.

I basically only buy the bare necessities like gas and groceries. I can cut non essentials but I’ve gotta eat and get to work. I only shop at Lidl now. For a family of 3 I’ve been spending $80-125 on groceries a week. I made the mistake of stopping in at Publix the other day and a small basket of items was $50.

I’ve started growing tomato’s, cucumbers, eggplant, peppers, herbs and another foods in my garden. Even fresh produce costs a lot now. I’ve noticed way more people now seem to be gardening than before. I’ve always enjoyed it. Reduces stress and saves money.

 

[Skippy722]

I’ve started growing tomato’s, cucumbers, eggplant, peppers, herbs and another foods in my garden. Even fresh produce costs a lot now. I’ve noticed way more people now seem to be gardening than before. I’ve always enjoyed it. Reduces stress and saves money.

Someone better tell my wife lol!

The chickens are getting ever bigger though. With as many eggs we go through they’ll definitely be saving us money… eventually…. I bought a nice chicken coop, but the fence around the coop was free!

 

[JeffKeryk]

A capitalist economy is driven by greed. Humans are driven by envy.

According to Adam Smith, self interest is productive; greed becomes destructive.

 

[doitmyself]

Someone better tell my wife lol!

The chickens are getting ever bigger though. With as many eggs we go through they’ll definitely be saving us money… eventually…. I bought a nice chicken coop, but the fence around the coop was free!

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We just got rid of our chickens after about 2 decades. I would be surprised if you ever save money on eggs without some low cost feed option. My wife did not do the winter light thing so you have months of no egg production with feed input.

But, the other elements were worth it. Definitely better eggs vs. the factory ones. And, it provided pleasure for my wife.

 

[Passport1]

According to Adam Smith, self interest is productive; greed becomes destructive.

'The butcher, the brewer and the baker' that Smith observed gives capitalism its freedom. Sure excessive greed is destructive as gluttony. That's not to say we ought to feel guilty about enjoying a meal. Ayn Rand pushed this to its limit, "Until and unless you discover that money is the root of all good, you ask for your own destruction." The true ascetic among us is rare. Humans are everywhere and always reminded their situation by the surroundings. It can be tamped down some but the instinct is deep to 'keep up with the Jonses'.

Envy is what motivates us most.

 

[PimTac]

Envy is what motivates us most.

Until we realize that envy is a hollow motivation

 

[Passport1]

I don't argue envy is a good thing but it is a force we have to contend with.

 

[JeffKeryk]

'The butcher, the brewer and the baker' that Smith observed gives capitalism its freedom. Sure excessive greed is destructive as gluttony. That's not to say we ought to feel guilty about enjoying a meal. Ayn Rand pushed this to its limit, "Until and unless you discover that money is the root of all good, you ask for your own destruction." The true ascetic among us is rare. Humans are everywhere and always reminded their situation by the surroundings. It can be tamped down some but the instinct is deep to 'keep up with the Jonses'.

Envy is what motivates us most.

The lines between self interest, greed and envy are blurred, for sure.

 

[Cujet]

A capitalist economy is driven by greed. Humans are driven by envy.

And yet, I can purchase my groceries for HALF the cost of Publix, at WalMart or Costco. And while I am there, fill up on Costco gas for 50c less per gallon.

I vote this one with my wallet. The point above is correct, never reward bad behavior.

There is a gas station that is $1 more than everyone else. But the location is remote. If I must purchase there, I get $2 worth of gas and go elsewhere.