New Groundwork Report Finds Corporate Profits Driving More Than Half of Inflation

New Groundwork Report Finds Corporate Profits Driving More Than Half of Inflation

Even as the cost of doing business has gone down, corporations continue to pad their bottom lines at consumers’ expense

Today, Groundwork Collaborative released a new report, “Inflation Revelation: How Outsized Corporate Profits Drive Rising Costs,” that finds corporations have driven more than half of the inflation we’ve seen since input costs have come down.

“Inflation is coming down, but families are still feeling the pinch at the checkout line,” said Lindsay Owens, executive director of Groundwork Collaborative. “Even as supply chain snarls have receded and the U.S. economy has stabilized, our research finds that businesses continue to pad their bottom lines at the expense of American families.”

Among the report’s key findings:

• From April to September 2023, corporate profits drove 53% of inflation. Comparatively, over the 40 years prior to the pandemic, profits drove just 11% of price growth.
• While prices for consumers have risen by 3.4% over the past year, input costs for producers have risen by just 1%. For many commodities and services, producers’ prices have actually decreased. Corporations have failed to pass these savings to consumers.
• Corporate profits as a share of national income have skyrocketed by 29% since the start of the pandemic. While our economy has returned to or surpassed its pre-pandemic levels on many indicators, workers’ share of corporate income has still not recovered.

“It’s one thing for corporations to pass reasonable increased costs to consumers. It’s another for them to line their coffers by exploiting Americans who are just trying to get by,” said Liz Pancotti, strategic advisor for Groundwork and a co-author of the report. “It’s time to rein in corporate price gouging – or families will continue to pay the price.”

Groundwork was one of the first to expose the link between corporate price gouging and inflation. Starting in the summer of 2021, Groundwork began digging through recent corporate earnings call transcripts across multiple industries experiencing record-high prices. This research revealed CEOs openly bragging to their shareholders about their ability to raise prices beyond their rising costs to increase profits. To justify these moves, CEOs hid behind the cover of supply chain issues and the economic turmoil caused by the pandemic.

Over two years later, corporations continue to be explicit about how they have and will continue to do so even as inflation comes down and supply chains normalize. The report highlights recent quotes from companies, including Procter & Gamble, Kimberly Clark, General Mills, and PepsiCo.

Read the full report here and email press@groundworkcollaborative.org to speak to one of Groundwork’s inflation experts about these findings.