cross-posted from: https://kbin.social/m/canada@lemmy.ca/t/599978
Supply chains, worker wages and the price of energy has been blamed for the current bout of high inflation. But central bankers around the world are starting to clue in to something consumers have been aware of for a while — corporations just aren’t afraid to raise their prices anymore.
This is the best summary I could come up with:
When asked how much of Canada’s current inflationary problem can be blamed on price hikes above and beyond companies’ cost increases, Macklem said, “I don’t think we can put a number on it,” but other central bankers have been far more willing.
Paul Donovan, a London-based economist with Swiss bank UBS, says the scenario described above is what’s known as “profit-led inflation” and he’s been waving red flags about it for most of the past year.
While it has exposed itself to varying degrees in various places around the world, the one condition it requires is a strong narrative: consumers have to believe en masse that price increases are justified, or they won’t accept them.
“Consumers in the U.K. have shown themselves less willing to believe the narrative of why prices were rising, and supermarkets are eager not to alienate customers and so seek to shore up loyalty through the privileged discount scheme.”
Jim Stanford, an economist and director at the Centre for Future Work, says its refreshing to see central bankers start to acknowledge that corporate profits have played a disproportionate role in inflation, because for too long Canada’s economic discourse has been trying to put the blame on anything but that.
I’ve heard that advice from a dozen people [but] I think it’s unreasonable to expect that somehow consumers have to solve the problem by becoming bargain hunters and spending half their week looking at grocery store leaflets."
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