Study of 17,000 companies into COVID-induced greed inflation shows they benefited most from the cost of living crisis

ONE study of 17,000 UK companies by the country’s Unite Union found that on average it increased profit margins by 30% in the post-COVID period compared to 2018-19.

The alleged price gouging is rampant across industries, from supermarkets to energy companies and even private equity-backed veterinary chains. In total, 60%, or 9,651 companies analyzed, increased profit margins in the post-COVID period.

It comes at a time when real wages are falling for workers, who are facing historic cost-of-living pressures, especially for essentials like food and heating.

The study, which Unite says is the largest analysis of corporate profits since the start of the COVID-19 pandemic, alleges that profiteering has become systemic in British companies.

“Over the past two years, Unite has consistently criticized the profiteers responsible for the cost of living crisis,” the union wrote. “While workers have suffered the sharpest decline in real wages and living standards in generations, corporations have reaped hundreds of billions in profits.”

COVID profiteering

The global economy has endured a prolonged period of turmoil since the outbreak of the COVID-19 pandemic.

Unprecedented levels of government stimulus have gone into workers’ wallets and corporate coffers to help them deal with the impact of lockdowns, creating massive inflationary pressures.

At the same time, supply chains fell into chaos because of those blockades, distorting the supply-demand dynamics of the global economy.

To make matters worse, Vladimir Putin’s invasion of Ukraine and subsequent tariffs on Russia have caused energy prices to soar, while cutting off important food inputs like grain.

Combined, these forces are responsible for the wave of inflation over the past few years, peaking at 11.1% in the UK and 10.6% in the euro area. However, they also give businesses reasons to increase prices faster than costs.

Unite’s findings are consistent with previous studies of large firms’ profit margins, demonstrating that instead of absorbing higher costs from supply shocks, they pass them on to consumers. .

ONE Global study of 1,350 companiesincluding Shell, Exxon Mobil and Kraft Heinz, saw profits increase 30% from 2019 to 2022.

Analysis by the Institute for Public Policy Research (IPPR) and Common Wealth also found that in the UK, 90% of the increase in profits came from 11% of publicly listed companies.

Overall, the companies surveyed by the consultancy are those best positioned to exploit rising prices, especially in the energy and retail sectors.

Analysts have warned that blatantly benefiting from the widespread cost of living crisis could be so unpopular that it jeopardizes a company’s social license to operate.

In a note published last April when inflation was still out of control, Société Générale economist Albert Edwards lament corporate greedsomething he had never seen in four decades in finance.

“Greedy inflation must surely come to an end. Otherwise, we may be looking at the end of capitalism,” Edwards wrote, accusing companies of using the war in Ukraine as an excuse to raise prices.

“This is a huge problem for policymakers and can no longer be ignored.”

Inflation has been under control by central banks in the West in recent months. In the euro zone, prices rose 2.4% in March, moving closer to the 2% target. It appears more stubborn in the UK and US, where consumer price inflation remains above 3%.

That hasn’t stopped workers across Europe from striking for higher wages to keep up with price increases over the past two years.

With companies increasing their profit margins—and in the UK at least, there is growing interest in taking advantage of the opportunity to reward your bosses Controversial salary increase— Management may have difficulty convincing striking workers that they cannot meet these demands.