Greedflation: are multis hungry for profit?

By: Trademagazin Date: 2023. 08. 15. 12:10

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In recent years and months, the domestic and international retail sector has come into focus for several reasons. The outbreak of the new type of coronavirus in 2020 led to a significant decline in trade, followed by a revival in business activity as economies reopened. Initially, prices decreased (e.g., fuel), but with economic recovery, they began to rise again. Demand and supply effects emerged simultaneously, resulting in a change in the inflationary environment. This complexity was further compounded by the Russian-Ukrainian conflict and its consequences, which rendered value chains more vulnerable. Additionally, a phenomenon known as “greedflation” has emerged, a term coined by blending “greed” and “inflation.” This term is used to describe the situation where multinational corporations exploit rising commodity prices as an excuse to significantly raise prices and profit margins to unprecedented levels.

In Hungary, the increase in food prices has been particularly pressing, and there have been instances where major food chains aimed to satisfy their post-pandemic profit hunger in recent times. This analysis seeks to understand the concentration of the food retail sector within the broader trade landscape and whether these chains had the opportunity to collectively exert their dominance in domestic markets.

Those following international economic press and news may have been alerted early on by reports highlighting the greed of large corporations. These reports argued that, given the nominal wage growth stemming from crises in the 2020s, increased purchasing power, and the changing inflation environment, not all price hikes by major companies were justified.