Greedflation

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Greedflation is a theory that describes the idea that some inflation is driven by increases in corporate profits. Suggested mechanisms include price gouging, price fixing, windfall gains resulting from information asymmetry, monopoly-like power, and external shocks to the economy. The theory, which first gained traction among left-wing pundits and trade unions,^[1] was considered fringe before the COVID-19 pandemic.

According to Paul Hannon of The Wall Street Journal, most economists believe profits have played a larger role in the post-COVID-19 inflationary episode than during the period of inflation that had occurred in the 1970s, although the issue of precisely to what degree has proven controversial and a point of contention.^[2] Organizations and notable people that have expressed concern about inflation alleged to have resulted from outsized or unusually high corporate profits include the International Monetary Fund (IMF), the European Central Bank (ECB), Federal Trade Commission (FTC), Isabella Weber, Paul Donovan, and Robert Reich. Some proposed remedies include pursuing anti-trust enforcement, windfall profit taxes, and anti-price gouging measures like price caps. Organizations and notable people who dispute the concept include The Economist while others who think greedflation exists but is not as significant include CNN, Justin Wolfers, Jason Furman, and Noah Smith.