Data highlight greedflation
Competition Commission shows half of price hikes are due to the rise in corporate profits
Corporate profits accounted for 50% of Greece’s GDP price deflator – the tool measuring the extent to which the economy’s growth is due to price hikes – in the first quarter of 2023, a percentage that is the third highest among EU member-countries, according to the Greek market watchdog.
At the same time, the contribution of labor costs – cited by several companies to justify price hikes – was only 35%, which is the second lowest in the EU and shows one of the reasons why high prices are affecting a large number of households. The tax contribution was just 15%.
The above figures are included in the Competition Commission’s latest newsletter published on Monday, with a clear suggestion of the link between inflation and excessive corporate profits, in other words the phenomenon known as greedflation.
It is no coincidence that, in his message, the president of the commission, Ioannis Lianos, devotes a large part to the relevant research of the European Central Bank, pointing out that “it is now accepted that the competition authorities should contribute, within the framework of their competences, to the collective effort of containing inflation in case of distributive justice implications (loss of consumer surplus and transfer of wealth to sellers/suppliers from final consumers or input producers).”
Although the commission refrains from directly linking the phenomenon of greedflation to the maintenance of fresh milk prices at high levels, since the mapping of the market for fresh milk, cheese (feta/gouda) and yogurt is in the finalization phase, it highlights several critical points. This is because, according to the research carried out by the regulator, Greece is among the most expensive countries in the EU for fresh milk. In fact, despite the de-escalation of producer prices, the retail prices of fresh milk in Greece are maintained at high levels, which, as the commission points out, is probably not compatible with either the cost of raw materials or the cost of energy.
