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TLDR: * Profits: 45 percent * Import costs: 40 percent * Labour costs: 25 percent Somehow obviously arriving at 110%? "As the Chart of the Week shows, the

TLDR: * Profits: 45 percent * Import costs: 40 percent * Labour costs: 25 percent Somehow obviously arriving at 110%? "As the Chart of the Week shows, the higher inflation so far mainly reflects higher profits and import prices, with profits accounting for 45 percent of price rises since the start of 2022." "Import costs accounted for about 40 percent of inflation, while labor costs accounted for 25 percent. Taxes had a slightly deflationary impact."

rakoo 3y ago
Gentle reminder that "labour costs" are, in fact, what allows you and a large majority of humans to live ie wages. Framing it as such is really non neutral and perpetuates the idea that companies should come first.
tnel77 3y ago
I’m told that greedy employees are to blame for 95% of inflation, so this is an interesting take on the subject. /s in case someone thought I was serious?
QuarterReptile 3y ago
Why were corporations settling for such comparatively low profits before 2022?
- toomuchtodo 3y ago
  Because they didn't know the pricing power they had. The macro gave them cover to stretch and see what would happen.
  - m-ee 3y ago
    A lot of economics seems to me like the “perfectly spherical cow in a vacuum” jokes you hear about physics. There’s no concept of friction or activation energy. “The market” simply adjusts in real time without human interaction. In the real world someone needs to pitch a price increase. There’s risk that sales and profits might drop. That’s bad for the company and that persons career. When everyone else is raising prices and your costs are going up then that risk:reward ratio looks different. My company was seeing increased material costs, they raised prices to cover that and then some. Sales are down but profits went up slightly. I was in the meetings where this was discussed yet people will tell me it doesn’t happen.
    - mrguyorama 3y ago
      It's because if you are involved in economics, you've already bought the "markets are the most efficient by definition" dogma, so you cannot question that maybe untestable wild ass-pull theories from some dude writing a book aren't actually an accurate model of the real world. Economics is at the level of aristotlian physics: "Surely lighter objects fall slower, it just makes sense and I have demonstrated so with this feather!" was the law of physics for millennia until someone actually decided to measure it in a way that could isolate the force of gravity.
- bryanlarsen 3y ago
  Most prices are "sticky" -- they don't change prices continuously like the prices of commodities and stock prices do, they have a sticker price that changes irregularly. Since they change less frequently, changes are larger. Example: assume the price of wheat sees steady inflation at 5%/year, and the price changes every day. Also assume that the cost of manufacturing a loaf of bread is solely dependent on the price of wheat, but because it's sold retail, it's price is sticky, and only changes every second year. So the annual inflation on the price of bread fluctuates between 0% and 10%. On the year the price goes up profits increase and on the year the price doesn't increase, profits go down.
he0001 3y ago
> Somehow obviously arriving at 110%? Isn’t that how inflation works?
scythe 3y ago
>Somehow obviously arriving at 110%? Because decreases in effective tax rates account for –10% of the observed change. Including negative contributions is a little confusing, but it gets a lot more confusing when you omit that part without clarifying why.
- starbugs 3y ago
  Do you have a source for that? Then I would edit the parent to include that.
cj 3y ago
> Just a short summary for everyone who doesn't want to read I found the 2nd half of the article more interesting than the first (2nd half is about employee wages) It’s worth a full read IMO

rakoo 3y ago

Gentle reminder that "labour costs" are, in fact, what allows you and a large majority of humans to live ie wages. Framing it as such is really non neutral and perpetuates the idea that companies should come first.

tnel77 3y ago

I’m told that greedy employees are to blame for 95% of inflation, so this is an interesting take on the subject. /s in case someone thought I was serious?

QuarterReptile 3y ago

Why were corporations settling for such comparatively low profits before 2022?

toomuchtodo 3y ago
Because they didn't know the pricing power they had. The macro gave them cover to stretch and see what would happen.
- m-ee 3y ago
  A lot of economics seems to me like the “perfectly spherical cow in a vacuum” jokes you hear about physics. There’s no concept of friction or activation energy. “The market” simply adjusts in real time without human interaction. In the real world someone needs to pitch a price increase. There’s risk that sales and profits might drop. That’s bad for the company and that persons career. When everyone else is raising prices and your costs are going up then that risk:reward ratio looks different. My company was seeing increased material costs, they raised prices to cover that and then some. Sales are down but profits went up slightly. I was in the meetings where this was discussed yet people will tell me it doesn’t happen.
  - mrguyorama 3y ago
    It's because if you are involved in economics, you've already bought the "markets are the most efficient by definition" dogma, so you cannot question that maybe untestable wild ass-pull theories from some dude writing a book aren't actually an accurate model of the real world. Economics is at the level of aristotlian physics: "Surely lighter objects fall slower, it just makes sense and I have demonstrated so with this feather!" was the law of physics for millennia until someone actually decided to measure it in a way that could isolate the force of gravity.
bryanlarsen 3y ago
Most prices are "sticky" -- they don't change prices continuously like the prices of commodities and stock prices do, they have a sticker price that changes irregularly. Since they change less frequently, changes are larger. Example: assume the price of wheat sees steady inflation at 5%/year, and the price changes every day. Also assume that the cost of manufacturing a loaf of bread is solely dependent on the price of wheat, but because it's sold retail, it's price is sticky, and only changes every second year. So the annual inflation on the price of bread fluctuates between 0% and 10%. On the year the price goes up profits increase and on the year the price doesn't increase, profits go down.

he0001 3y ago

> Somehow obviously arriving at 110%? Isn’t that how inflation works?

scythe 3y ago

>Somehow obviously arriving at 110%? Because decreases in effective tax rates account for –10% of the observed change. Including negative contributions is a little confusing, but it gets a lot more confusing when you omit that part without clarifying why.

starbugs 3y ago
Do you have a source for that? Then I would edit the parent to include that.

cj 3y ago

> Just a short summary for everyone who doesn't want to read I found the 2nd half of the article more interesting than the first (2nd half is about employee wages) It’s worth a full read IMO