GREEDFLATION - ECONOMY
News: What
is Greedflation? Does India also have it?
What's in the news?
● A
study by the International Monetary Fund (IMF) — titled ‘Euro Area Inflation
after the Pandemic and Energy Shock: Import Prices, Profits and Wages’ —
published last week found that profits contributed even more than higher import
prices
Key takeaways:
● The
increase in nominal profits was largest in sectors benefiting from increasing
international commodity prices and those exposed to recent supply-demand
mismatches.
Greedflation:
● Greedflation
simply means (corporate) greed is fueling
inflation.
● In
other words, instead of the wage-price spiral, it is the profit-price spiral
that is in play.
Features:
● In
essence, greedflation implies that companies exploited the inflation that
people were experiencing by putting up
their prices way beyond just covering their increased costs and then used that
to maximize their profit margins. That, in turn, further fueled inflation.
● In
the developed countries — in Europe and the US — there is a growing consensus
that greedflation is the real culprit.