Corporations are a lot more willing than usual to raise their prices lately, and it’s putting more of the burden of high inflation on consumers.
That may not come as much of a surprise to anyone who has browsed a grocery aisle, kicked the tires at a car dealership or filled up a gas tank of late, but even the Bank of Canada is starting to take notice of the trend, as the central bank continues its battle to wrestle inflation into submission.
Speaking to a parliamentary committee in Ottawa this week, the bank’s governor, Tiff Macklem, told lawmakers that the bank has noticed a troubling new trend coming out of the corporate sector.
For much of the past few decades, any time businesses have seen a jump in their input costs — the amount they pay for things like raw materials, energy and even workers — “they were pretty cautious about passing on [that cost into] the prices they charged for goods and services,” Macklem said.
Their reasoning was simple: they were afraid of losing customers.
Yeah I’m not buying the claim that corporations have ever been any less than 100% willing to raise prices as much as they can.
It’s the inevitable conclusion of allowing oligopolistic conditions to be formed.
With enough competition, companies are afraid of that one competitor who doesn’t raise their prices. This limits their price increases to actual cost increases instead of higher profits.
There’s definitely been more aggressive price raising since COVID started since I think businesses discovered that they can push it a lot further than before.
Yes exactly. They discovered that they (now) can push it a lot further than before. Their desire to isn’t new; the opportunity is.
So the question is, what changed about the businesses’ environment that allows them to raise prices?
In my worldview these two are big factors:
The idea they were driving at is that, decades ago, that limit was actually imposed by the consumer. Nowadays they know people will just blame Trudeau or Biden or whoever and make excuses for the rich so there’re no more barriers. They also have a much stronger foothold than before and so don’t need to worry as much, and many of the modern scummy tactics, such as McDonald’s running anti-suing propoganda, are exactly that, fairly modern.