If there was ever proof of “greedflation” — corporations inflating prices just because they can — it’s the price rollbacks many retailers are now touting as “for the customer” in press releases and commercials.
Part of the disconnect between how people feel about the economy and the economy’s actual performance (by traditional metrics) has been what people experience daily in grocery and big-box stores and what they experience when they check on their investment accounts every few months or so.
Investment metrics are off the charts, with the stock market performing amazingly. Which is great if you’re someone who was able to invest hundreds of thousands or millions of dollars into the stock market or someone who is about to retire and access that 401(k).
But for everyone else, what matters is the painfully high numbers at the cash register and the gas pump.
Within a year of the pandemic starting, “greedflation” was floated as the primary cause for the ballooning prices on everything. But that was considered a fringe theory, bordering on a conspiracy, and the rapidly climbing inflation was attributed to supply shortages vs. high demand (toilet paper and hand sanitizer, anyone?), supply chain disruptions, expenses related to health and safety protections and what amounted to hazard pay for employees.
And yet, large corporations were posting record profits.
For four years, the world’s biggest companies continued to raise prices and post record profits, despite the vast majority of supply shortages and disruptions subsiding. Unfortunately, because of so many companies’ near-monopoly status, with dozens of individual brands or retailers all owned by the same parent company, customers couldn’t find relief anywhere.
Traditional economic theory would suggest that one parent company would keep prices lower in order to attract more business. However, there is so little true competition left in each of the major retail sectors that companies could continue to raise prices virtually unchecked. All customers could do was shrug and accept it.
Now those de facto monopolies have finally hit the point of unsustainability, and have no choice but to pull back.
We wish it was because consumers got wise to profiteers’ games and exerted market control to put an end to it. In reality, greedflation finally outpaced spending power, and consumers had to start making tough decisions about what they could afford and what they could live without. People didn’t just go for cheaper alternatives — they started buying less in general and stopped buying nonessential items in particular.
But those sprawling corporations can’t post profits if they can’t sell products — hence, the price rollbacks being introducing with much fanfare and PR spin. Let’s be honest: Lowering the prices isn’t some favor they are doing for us, the consumers. If it was, they would have done it a long time ago. No — they had no choice, because they had finally hit the tipping point where price-gouging began to chip away at their profit margins instead of adding to them.
By all means, enjoy the relief at the cash register. But don’t be fooled into thinking companies did it for you.
