According to the think tank, price hikes by greedy companies are the cause of rising inflation, not excessive wage demands from workers.
Dr George Dibb of the Institute for Public Policy Research (IPPR) urged British politicians to rein in “greed” after inflation remained above 10% driven by runaway food and drink prices.
Dr. Dibb said: “Household budgets are under pressure from high inflation, which remains in double digits according to new data. While gasoline prices have fallen, food prices continue to rise.
“While families struggle to make ends meet, some companies continue to make higher profits from these price increases and ignore the impact on consumers. It is time for politicians to turn to ‘greed’ and make it a priority to limit corporate profits rather than blaming workers’ wages for inflation.”
Last month, a study by the union Unite showed that large companies are fueling inflation with price increases that exceed increases in raw material and wage costs.
An analysis of the top 350 companies listed on the London Stock Exchange showed that the average profit margin – a company’s revenue divided by cost of sales – fell from 5.7 percent in the first half of 2019 to 10.7 percent in the first half of 2019.
The European Central Bank said the “strong” growth in corporate earnings and their premiums “justifies constant monitoring and further analysis along with wage changes.”
The International Monetary Fund said last week it was “unconvinced” by evidence of a wage-price spiral in which excessive wage demands from workers are fueling the “frozen” inflation that the Bank of England says it is keeping a close eye on.
Pierre-Olivier Gurinsha, chief economist at the IMF, also noted that corporate profitability remained strong during the crisis.
He said businesses have handled the cost-of-living crisis better than workers. The downside of rising prices, but only a slight increase in wages, is that profit margins have “struck up,” he added.
Katherine Mann, a member of the Bank of England’s Monetary Policy Committee, which sets interest rates, told Bloomberg News that she is “concerned about the extent of companies’ influence on pricing and the acceptance of these price hikes by many consumers.” .
Despite the cost-of-living crisis, “many people are still willing to pay higher prices and companies are willing to keep their prices high.”
Source: I News
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