Somebody hasn’t taken basic economics…..I love the idea that all businesses were charities prior to 2021 and all of them at once decided to care about profit.
The question people should be asking is WHY do corporations now have the pricing power to bag bigger profit margins.
In other words, why is there no longer enough competition to affect that. It seems too few mega-corps now control the supply of everything.
The end result is a capitalist economy with a communist problem: too little competition.
If inflation is 10% then it goes down to 5%. Inflation has dropped, but prices are still rising at 5%. The prices will not be coming down.
Discretionary spending is down, but essential spending (utilities, food etc) is highly inflated. Those newspapers tell exactly that story
Falling inflation does not equal falling prices.
Falling inflation means prices are RISING slower.
This cartoon is classic disinformation.
Prices still rise with lower inflation… 🤦♂️
Menu costs and sticky prices. Firms don’t want to keep increasing prices in order to keep up with inflation. It costs money to print new menus and there is a marketing cost every time prices rise as people have a negative experience when prices rise. So in a time where the rate of inflation is high, there is a likelihood that a small increase in line with inflation will require another price increase sooner rather than later. So it makes sense to increase price higher than the current level and let prices rise up to you. As long as you don’t increase too much in a single move such that you lose too much demand, it is in many ways cheaper to do it this way.
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Somebody hasn’t taken basic economics…..I love the idea that all businesses were charities prior to 2021 and all of them at once decided to care about profit.
The question people should be asking is WHY do corporations now have the pricing power to bag bigger profit margins.
In other words, why is there no longer enough competition to affect that. It seems too few mega-corps now control the supply of everything.
The end result is a capitalist economy with a communist problem: too little competition.
If inflation is 10% then it goes down to 5%. Inflation has dropped, but prices are still rising at 5%. The prices will not be coming down.
Discretionary spending is down, but essential spending (utilities, food etc) is highly inflated. Those newspapers tell exactly that story
Falling inflation does not equal falling prices.
Falling inflation means prices are RISING slower.
This cartoon is classic disinformation.
Prices still rise with lower inflation… 🤦♂️
Menu costs and sticky prices. Firms don’t want to keep increasing prices in order to keep up with inflation. It costs money to print new menus and there is a marketing cost every time prices rise as people have a negative experience when prices rise. So in a time where the rate of inflation is high, there is a likelihood that a small increase in line with inflation will require another price increase sooner rather than later. So it makes sense to increase price higher than the current level and let prices rise up to you. As long as you don’t increase too much in a single move such that you lose too much demand, it is in many ways cheaper to do it this way.
What’s an extra trillion dollars between friends?
[https://fred.stlouisfed.org/series/CP](https://fred.stlouisfed.org/series/CP)
The comic is helping perpetuate the misconception that prices fall as inflation drops. 🤦🏻♂️.
Ummm
You understand that as long as the inflation rate I’d positive prices are going up
Inflation falling from 4% to 3%
Means prices are getting worse by 3% rather than 4%