Corporate majors boosted profits through 'greedflation', says new report

Some of the world's biggest multinational companies have been fuelling inflation through unnecessary and excessive price hikes and should face a global corporation tax, according to a report published on Thursday.

Food giants Kraft Heinz, Archer-Daniel-Midland along with energy majors Shell and Exxon were all named in a report compiled by the UK-based think tanks IPPR and Common Wealth, which said they boosted prices more than required to beat cost inflation, swelling their profit margins.

This profiteering has been dubbed "greedflation". Earnings surged by 30% among UK-listed firms, driven by just 11% of those than that made super-profits on the back of huge price rises. The gains were even bigger in the US.

“Many large international companies were able to comfortably increase prices during the global inflation period, protecting or even driving up their profit margins, while ordinary families saw their real incomes wither away," the report stated.

“Because energy and food prices feed so significantly into costs across all sectors of the wider economy, this exacerbated the initial price shock – contributing to inflation peaking higher and lasting longer than had there been less market power,” the report said.

“Such companies have been able to protect their profit margins or even increase them, generating excess profits through a combination of high market power and global market dynamics,” the report added.

It added that a tax on the estimated $4trln of excess global profits was needed, combined with a break up of monopolistic practices that allowed firms to exploit their market power.

Reporting by Frank Prenesti for Sharecast.com