Consumer prices rose 7.9% in February from a year earlier, according to the federal government’s latest estimate, the fastest surge in inflation since the early 1980s.
But not everyone feels the pressure of higher prices in the same way. As consumer sentiment slumped, corporate profits soared as companies reap the rewards of their customers’ continued drive to pay more.
The top 30 companies in the major industrial categories of the consumer price index raised their prices while collectively increasing their profits by $151 billion, according to liberal watchdog group Accountable.USwhich compared the companies’ latest annual and quarterly earnings reports with filings the previous year.
The companies also repurchased an additional $28 billion of their own stock, a strategy aimed at driving up the stock price, which also helps boost executive compensation.
“These companies would have consumers believe they raised prices just to meet external costs, but last year’s tens of billions in extra profits and generous giveaways to investors show otherwise.Accountable.US President Kyle Herrig said in a statement.
People hate to see prices rise and as a result inflation has eclipsed low unemployment and strong job growth as the biggest political economy story, sinking the president’s approval rating Joe Biden and threatening Democrats’ control of Congress in this year’s midterm elections.
Republicans blamed the price hike on the US bailout, the $1.9 trillion pandemic relief bill Democrats passed around this time last year, boosting purchasing power of most American households with $1,400 checks.
Democrats point to pandemic-related supply chain issues and, increasingly, corporate greed as the main culprits for the price hike. In his State of the Union address last week, Biden said his administration would crack down on shipping companies that overcharge American businesses and consumers.
And this week, Biden warned oil and gas companies not to use the war in Ukraine as an excuse to raise prices too high.
“Russia’s aggression is costing us all, and now is not the time to profit or inflate prices,” Biden said Tuesday.
On Capitol Hill, the House Financial Services Committee, chaired by Rep. Maxine Waters (D-California), devoted an entire hearing Tuesday to the benefit of corporations.
“Right now we’re seeing big companies taking advantage of economic conditions and a lack of real competition to pass higher prices on to consumers just because they can,” Waters said.
Rep. Patrick McHenry (RN.C.), the top Republican on the committee, said Democrats were simply trying to distract from the impact of the bailout and defended the companies against accusations of profiteering.
“Profit doesn’t equal greed,” McHenry said.
the Accountable.US Report is an effort to support the argument that higher prices are more a deliberate choice by companies than an economic phenomenon that forces companies to share the burden of higher costs with their customers. The group looked at revenue data from the three largest companies in each of the 10 different industry groups that the Bureau of Labor Statistics tracks for its monthly inflation readings.
The three largest companies in the home food category, for example – Walmart, Kroger and Costco – saw their net revenues increase by a combined $238 million. Food prices rose 8.6% in February from a year earlier, the Bureau of Labor Statistics said Tuesday.
A Walmart presentation to shareholders last month credited ‘price management’ for the company’s strong gross profit growth – proof, according to Accountable.US, that the retail giant raised prices to reap higher profits rather than to offset rising costs.
“Despite what they claim, these highly profitable companies have a choice, and they choose to fatten their bottom line rather than maintain consumer price stability,” Herrig said.
A Walmart spokesperson noted that during the company’s recent earnings conference call, executives pointed to wider “price differentials” between Walmart and its competitors, which means the company has in undermined competing companies that raised prices.
“It’s about making sure customers see value at a time when prices are rising in so many sectors of the economy, being able to deliver customer value and fight inflation is what we do,” Walmart CEO John Furner said.