Corporations are using the excuse of inflation to raise prices and make fatter profits

 The real reason for inflation is the increasing concentration of the American economy into the hands of a relative few corporate giants with the power to raise prices. In the process, they’re raking in record profits even as they try to screw employees.

According to Raw Story, “in April, Procter & Gamble announced it would start charging more for consumer staples ranging from diapers to toilet paper, citing “rising costs for raw materials, such as resin and pulp, and higher expenses to transport goods.” That was rubbish. P&G continues to rake in huge profits. In the quarter ending September 30 (after its price increases went into effect), it reported a whopping 24.7 percent profit margin. It even spent $3 billion during the quarter buying back its stock.”

The reason it could raise prices and rake in more money is P&G faces almost no competition. The lion’s share of the market for diapers (to take one example) is controlled by just two companies – P&G and Kimberly-Clark – which coordinate their prices and production.

Raw Story

 Here’s another. PepsiCo (Frito-Lay, Gatorade, Quaker, Tropicana, and other brands), and Coca-Cola. In April, PepsiCo announced increasing prices, blaming “higher costs for some ingredients, freight, and labor.” That was pure nonsense. The company didn’t have to raise prices. It recorded $3 billion in operating profits through September.

And still another half of the recent rise in grocery prices is from meat products — beef, pork, and poultry. Just four large conglomerates control most meat processing. They’re raising their prices — and coordinating their price increases — even as they’re scoring record profits. Here again, they’re using “inflation” as an excuse.

So why is this happening?

1ne: Corporations know consumers are flush with cash and want their money.

2wo: They believe that consumers won’t desert them if they raise prices.

3hree: They believe consumers are too dumb to know what’s happening.

4our: CEOs want a huge payday and increased sales satisfy investors.

This is a huge mistake. Sales of private label products are increasing rapidly, and some chains have even introduced premium personal label products, which are still less expensive than national brands.

Another example of corporate greed is Kellogg’s. They have made almost $2 billion in profit, but they only offered their workers a 3% raise while trying to hire new employees with fewer benefits to break the union.

Finally, the underlying problem is not inflation. It’s lack of competition. Since the 1980s, two-thirds of all American industries have become more concentrated. Monsanto now sets the prices for most of the nation’s seed corn. Wall Street has consolidated into five giant banks. Airlines have merged from 12 carriers in 1980 to four today, which now control 80 percent of domestic seating capacity. 

The media is slowly picking up on this sham, and corporations will be exposed. Consumers will have their revenge when unit sales decline and go to competitors.

About richmeyer

Rich is a passionate marketer who is able to quickly understand what turns a prospect into a customer. He challenges the status quo and always asks "what can we do better"? He knows how to take analytics and turn them into opportunities and he is a great communicator.

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