Ihe lexicon of price trends continues to grow. After inflation, deflation, stagflation, the time has come for “greedflation”, or “profitflation”, the rise in prices driven by the greed of companies that are tempted to improve their profitability. This is the umpteenth disruption of the world economy caused by the succession of shocks that it has suffered for three years, between waves of pandemic, shortages of components, geopolitical tensions and fragmentation of world trade.
Even as the economy slows down, after having rebounded strongly in the wake of deconfinements, some companies are taking advantage of this to consolidate their margins, to the point of being one of the main drivers of the surge in price indices. The agri-food sector is a textbook case for observing a movement that worries economists and political leaders. After having affected intermediate goods, then durable goods such as cars, “greedflation” becomes more visible for consumers, when it affects their most basic daily purchases, namely food.
When the prices of gas, oil and cereals exploded in the first months of the Russian-Ukrainian war, consumers had welcomed the inflationary pressure with a certain determinism. They discovered that Ukraine is a major sunflower producer, that the cost of maritime transport fluctuates greatly according to demand, and that fossil fuels still massively help farmers grow the products needed to fill our plates.
Calms in commodity prices
The increase was all the more understandable as it spread in an impressionistic way thanks to the tariff shields deployed by the government. Above all, the consumer had not yet realized the charms of our highly regulated system of price negotiations between producers and distributors. France is indeed the only country where these take place once a year and end on the 1er March. This year, the awakening is painful.
Food prices rose by 15.9% in March, right at the time when we see the first lulls in commodity prices. Oil fell by half, rice by 19%, wheat by 30%, glass by 18% and the cost of containers by more than 80%. Some take the opportunity to put the difference in their pocket and inflate their margins.
The results published by the agrifood giants give an idea of the phenomenon at work. For most, the margin rate is at its highest level in twenty years. National accounting also sheds light on the debate. In a note written for the Institut La Boétie, a think tank close to La France insoumise, Sylvain Billot, statistician, notes that more than a third of the increase in the production prices of processed food products is due to the rise industry profits. “In a period of declining productivity gains, like the one we are going through, the margin rate should compress, he explains. This is what happened in the 1970s. Today, profits are increasing much faster than wages. »
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