5 ms·

What makes more sense? (1) The majority of companies expected their input costs to rise so quickly increased prices to compensate, when they didn't rise as muc

What makes more sense? (1) The majority of companies expected their input costs to rise so quickly increased prices to compensate, when they didn't rise as much as expected they slowly lowered prices to remain competitive. Since nearly everyone was reading the market the same way, they weren't punished for this. (2) Companies became really greedy a few years ago, and increased prices just because they could. Recently they have been less greedy, and prices have come down.

000ooo000 3y ago
False dichotomy
HHC-Hunter 3y ago
I'll take window number 2, whilst continuing the notion that they haven't lowered their greed.
layoric 3y ago
Rise like rockets, fall like feathers as they say. Out of interest, in what markets have you seen prices come down?
- megaman821 3y ago
  Gas, batteries, cars and homes. I understand people look at their grocery bill and get mad, since nothing seems to bring down food though.
  - WillPostForFood 3y ago
    Eggs have come way back down.
    - autoexec 3y ago
      After being ordered to pay massive fines in price gouging lawsuits so no surprise there.
  - layoric 3y ago
    Wow, really? Different here in Australia, petrol is $5.50/gallon ($2.2 per litre converted), batteries I don't know, but EVs are crazy expensive. And housing is absolute madness, Eg Sydney median house price is something like $1.125M AUD ($740k USD). So the price drops seem to be delayed here I guess..
    - PebblesHD 3y ago
      That may be the median for all dwellings including apartments. The median detached house price is closer to $1.4m AUD in Sydney at the moment. Grocery prices are still near record highs, petrol has come down slightly but give it a week and it’ll be back up with our cycles, and products are still being shrunk in dishonest ways. Still waiting to see the ‘prices come back down’ from the parent post, meanwhile our main shopping companies all posted record profits.
    - cqqxo4zV46cp 3y ago
      Regardless, using housing is pretty disingenuous anyway. It’s a largely second-hand peer-to-peer market. Not like my eggs…I hope.
    - WrongAssumption 3y ago
      Average gas price in Australia during November $1.3 was per litre.
      - layoric 3y ago
        Surprising, where I am in Canberra, I never see it below 1.99 AUD/litre for the cheapest ethanol heavy stuff, but at my local nearly always see it above $2 AUD. But I don't get fuel that often so maybe I've just missed the drops. Ahh, just realized $1.3 USD is about $2 AUD or ~$5.1USD/gallon, so yeah that tracks I guess.
  - soupfordummies 3y ago
    I'm not sure about batteries but gas/cars/homes are still WAY up from where they were about 4 years ago (wow, it's really been that long :P ) They've just ticked down (slightly) from their peaks.
- xnx 3y ago
  Lumber (5yr chart): https://tradingeconomics.com/commodity/lumber https://tradingeconomics.com/commodity/lumber
anigbrowl 3y ago
I lean toward (2), and I think we have strong evidence for this in the form of 'shrinkflation', where firms redesigned their packaging to provide less product while maintaining prices or brand identity (eg making the packaging appear to be the same size while having lower product weight/volume). The fact that changing product packaging requires a significant investment in adjusting production lines says to me that it was a proactive decision rather a simple reaction to market conditions. By contrast, eggs went up quite a bit a couple of years back due to a combination of increased demand and a coinciding outbreak of avian flu. But while one could feed chickens less or selectively breed for smaller eggs, the actual manufacturing of the egg is basically up to the animals rather than the accountants. If you crack open a fresh egg you pretty much know what you're getting and it isn't easy to change. It's not feasible to sell cartons with only 5 or 10 eggs rather than the more common amounts of 6 or 12 (or 30 if you have an insatiable appetite for them as I do). So there normal forces of supply and demand have reasserted themselves and prices have (somewhat) returned to where they were a few years ago. It's been easier to observe changes than for items like beef which I buy more intermittently.
- nradov 3y ago
  Shrinkflation is hardly a new phenomenon. There is no evidence to indicate that firms were less greedy a few years ago. Temporary high egg prices were at least partly caused by a temporary supply shortage from a bird flu outbreak. That was somewhat different from the monetary issues which usually drive inflation. https://apnews.com/article/bird-flu-outbreak-turkey-egg-chicken-prices-afca48e861a54091d0e224a5fcbed17b https://apnews.com/article/bird-flu-outbreak-turkey-egg-chic...
- falcolas 3y ago
  It's amusing to point out eggs as some kind of holy grail of how price moves naturally, when the two largest egg producers (Cal-Maine Foods and Rose Acre Farms) were just fined in federal court for price fixing.
  - Aunche 3y ago
    Kelloggs, General Mills, and Nestle hired lawyers that appealed to populism to convince jurors that egg producers price fixed with a probability of at least 51%. That's hardly proof of price fixing.
toomuchtodo 3y ago
Hard to say definitively. https://www.npr.org/2023/06/13/1182019025/is-greedflation-really-the-villain https://www.npr.org/2023/06/13/1182019025/is-greedflation-re... https://www.axios.com/2023/05/18/once-a-fringe-theory-greedflation-gets-its-due https://www.axios.com/2023/05/18/once-a-fringe-theory-greedf...
ren_engineer 3y ago
companies are always in maximized greed mode, governments are blaming them for stupid monetary policy and poor handling of COVID which resulted in tons of supply chain issues that allowed smart companies to maximize profits even more
kypro 3y ago
Actually, I think it's a little different. During the pandemic personal savings rates exploded and credit was extremely cheap. Companies realised that customers had plenty of cash in their pockets so could afford to raise prices without the demand destruction you'd typically expect so they did. You're right in the sense that this idea that corporate psychology just randomly changed over the last few years makes just as little sense as saying customers skimping and building up savings in 2020-2021 contributed to inflation in 2022.
Aeolun 3y ago
You mean it was just a happy little accident for companies that increasing prices by a lot now instead of gradually makes them a bunch of free money?
dongobread 3y ago
I don't think either of those theories is right. (1) doesn't explain the rise in corporate profits, and (2) is of course silly. Here is my theory: Consumers generally have an "acceptable" price range in their head for each product. When most retailers have prices within that range, it is really hard for a single company to raise prices above that range, as they'll lose a lot of business. But, COVID forced input prices to rise and fluctuate quite a bit. Once companies raised prices to account for input costs, consumers lost their sense of "normal". Then, companies were able to get away with charging prices even more, and could get away with raising prices above their competitors without losing any business.
danaris 3y ago
I would say (3): For many years, consolidation, deregulation, and other factors have led to a gradual but marked decrease in genuine competition in all sectors. As long as things were still trundling along as normal, the people at the top didn't really think about this too hard. Then COVID came. Between supply shocks, lockdowns, and various other temporary effects, we were told to expect inflation. Indeed, for a time, there were genuine, honest-to-god price spikes rippling through the economy directly because of the pandemic. But the causes of those spikes subsided. And the prices didn't come back down all the way. The people at the top realized that, because of how much we were all being told to beware of inflation, they could simply make the inflation happen and pocket the extra, and no one would notice. And for...I forget exactly how long, but well over a year, at least, the public broadly didn't notice. Now, we're noticing, and trying to make clear that this is what's happening. But people like you are still trying to act like this is impossible, companies can't really cause inflation purely by raising prices, that would be ridiculous, this is purely the aforementioned price shocks (that ended years ago, while the inflation didn't).
soupfordummies 3y ago
As for (2) did prices even really "come down" or did they just "stop rising so quickly"? In my experience around here, MOST things have nearly DOUBLED in price since COVID. And the prices aren't going down. They're just holding steady-ISH
- HDThoreaun 3y ago
  many prices have come down, eggs are less than $2 a dozen now. Gas prices are way down
  - soupfordummies 3y ago
    Eggs stopped shooting up yes. Gas is not really down though. It just stopped shooting up (which was my original point). Take a look: https://ycharts.com/indicators/us_gas_price https://ycharts.com/indicators/us_gas_price December 2019 - 2.67 12/2019 This time last year (12/2022) 3.20 (+20%) Today (12/2023) 3.36 (+5%)

000ooo000 3y ago

False dichotomy

HHC-Hunter 3y ago

I'll take window number 2, whilst continuing the notion that they haven't lowered their greed.

layoric 3y ago

Rise like rockets, fall like feathers as they say. Out of interest, in what markets have you seen prices come down?

megaman821 3y ago
Gas, batteries, cars and homes. I understand people look at their grocery bill and get mad, since nothing seems to bring down food though.
- WillPostForFood 3y ago
  Eggs have come way back down.
  - autoexec 3y ago
    After being ordered to pay massive fines in price gouging lawsuits so no surprise there.
- layoric 3y ago
  Wow, really? Different here in Australia, petrol is $5.50/gallon ($2.2 per litre converted), batteries I don't know, but EVs are crazy expensive. And housing is absolute madness, Eg Sydney median house price is something like $1.125M AUD ($740k USD). So the price drops seem to be delayed here I guess..
  - PebblesHD 3y ago
    That may be the median for all dwellings including apartments. The median detached house price is closer to $1.4m AUD in Sydney at the moment. Grocery prices are still near record highs, petrol has come down slightly but give it a week and it’ll be back up with our cycles, and products are still being shrunk in dishonest ways. Still waiting to see the ‘prices come back down’ from the parent post, meanwhile our main shopping companies all posted record profits.
  - cqqxo4zV46cp 3y ago
    Regardless, using housing is pretty disingenuous anyway. It’s a largely second-hand peer-to-peer market. Not like my eggs…I hope.
  - WrongAssumption 3y ago
    Average gas price in Australia during November $1.3 was per litre.
    - layoric 3y ago
      Surprising, where I am in Canberra, I never see it below 1.99 AUD/litre for the cheapest ethanol heavy stuff, but at my local nearly always see it above $2 AUD. But I don't get fuel that often so maybe I've just missed the drops. Ahh, just realized $1.3 USD is about $2 AUD or ~$5.1USD/gallon, so yeah that tracks I guess.
- soupfordummies 3y ago
  I'm not sure about batteries but gas/cars/homes are still WAY up from where they were about 4 years ago (wow, it's really been that long :P ) They've just ticked down (slightly) from their peaks.
xnx 3y ago
Lumber (5yr chart): https://tradingeconomics.com/commodity/lumber https://tradingeconomics.com/commodity/lumber

anigbrowl 3y ago

I lean toward (2), and I think we have strong evidence for this in the form of 'shrinkflation', where firms redesigned their packaging to provide less product while maintaining prices or brand identity (eg making the packaging appear to be the same size while having lower product weight/volume). The fact that changing product packaging requires a significant investment in adjusting production lines says to me that it was a proactive decision rather a simple reaction to market conditions. By contrast, eggs went up quite a bit a couple of years back due to a combination of increased demand and a coinciding outbreak of avian flu. But while one could feed chickens less or selectively breed for smaller eggs, the actual manufacturing of the egg is basically up to the animals rather than the accountants. If you crack open a fresh egg you pretty much know what you're getting and it isn't easy to change. It's not feasible to sell cartons with only 5 or 10 eggs rather than the more common amounts of 6 or 12 (or 30 if you have an insatiable appetite for them as I do). So there normal forces of supply and demand have reasserted themselves and prices have (somewhat) returned to where they were a few years ago. It's been easier to observe changes than for items like beef which I buy more intermittently.

nradov 3y ago
Shrinkflation is hardly a new phenomenon. There is no evidence to indicate that firms were less greedy a few years ago. Temporary high egg prices were at least partly caused by a temporary supply shortage from a bird flu outbreak. That was somewhat different from the monetary issues which usually drive inflation. https://apnews.com/article/bird-flu-outbreak-turkey-egg-chicken-prices-afca48e861a54091d0e224a5fcbed17b https://apnews.com/article/bird-flu-outbreak-turkey-egg-chic...
falcolas 3y ago
It's amusing to point out eggs as some kind of holy grail of how price moves naturally, when the two largest egg producers (Cal-Maine Foods and Rose Acre Farms) were just fined in federal court for price fixing.
- Aunche 3y ago
  Kelloggs, General Mills, and Nestle hired lawyers that appealed to populism to convince jurors that egg producers price fixed with a probability of at least 51%. That's hardly proof of price fixing.

toomuchtodo 3y ago

Hard to say definitively. https://www.npr.org/2023/06/13/1182019025/is-greedflation-really-the-villain https://www.npr.org/2023/06/13/1182019025/is-greedflation-re... https://www.axios.com/2023/05/18/once-a-fringe-theory-greedflation-gets-its-due https://www.axios.com/2023/05/18/once-a-fringe-theory-greedf...

ren_engineer 3y ago

companies are always in maximized greed mode, governments are blaming them for stupid monetary policy and poor handling of COVID which resulted in tons of supply chain issues that allowed smart companies to maximize profits even more

kypro 3y ago

Actually, I think it's a little different. During the pandemic personal savings rates exploded and credit was extremely cheap. Companies realised that customers had plenty of cash in their pockets so could afford to raise prices without the demand destruction you'd typically expect so they did. You're right in the sense that this idea that corporate psychology just randomly changed over the last few years makes just as little sense as saying customers skimping and building up savings in 2020-2021 contributed to inflation in 2022.

Aeolun 3y ago

You mean it was just a happy little accident for companies that increasing prices by a lot now instead of gradually makes them a bunch of free money?

dongobread 3y ago

I don't think either of those theories is right. (1) doesn't explain the rise in corporate profits, and (2) is of course silly. Here is my theory: Consumers generally have an "acceptable" price range in their head for each product. When most retailers have prices within that range, it is really hard for a single company to raise prices above that range, as they'll lose a lot of business. But, COVID forced input prices to rise and fluctuate quite a bit. Once companies raised prices to account for input costs, consumers lost their sense of "normal". Then, companies were able to get away with charging prices even more, and could get away with raising prices above their competitors without losing any business.

danaris 3y ago

I would say (3): For many years, consolidation, deregulation, and other factors have led to a gradual but marked decrease in genuine competition in all sectors. As long as things were still trundling along as normal, the people at the top didn't really think about this too hard. Then COVID came. Between supply shocks, lockdowns, and various other temporary effects, we were told to expect inflation. Indeed, for a time, there were genuine, honest-to-god price spikes rippling through the economy directly because of the pandemic. But the causes of those spikes subsided. And the prices didn't come back down all the way. The people at the top realized that, because of how much we were all being told to beware of inflation, they could simply make the inflation happen and pocket the extra, and no one would notice. And for...I forget exactly how long, but well over a year, at least, the public broadly didn't notice. Now, we're noticing, and trying to make clear that this is what's happening. But people like you are still trying to act like this is impossible, companies can't really cause inflation purely by raising prices, that would be ridiculous, this is purely the aforementioned price shocks (that ended years ago, while the inflation didn't).

soupfordummies 3y ago

As for (2) did prices even really "come down" or did they just "stop rising so quickly"? In my experience around here, MOST things have nearly DOUBLED in price since COVID. And the prices aren't going down. They're just holding steady-ISH

HDThoreaun 3y ago
many prices have come down, eggs are less than $2 a dozen now. Gas prices are way down
- soupfordummies 3y ago
  Eggs stopped shooting up yes. Gas is not really down though. It just stopped shooting up (which was my original point). Take a look: https://ycharts.com/indicators/us_gas_price https://ycharts.com/indicators/us_gas_price December 2019 - 2.67 12/2019 This time last year (12/2022) 3.20 (+20%) Today (12/2023) 3.36 (+5%)