According to an analysis of hundreds of company accounts, it seems that large corporations have fueled inflation with price increases that go beyond the rising costs of raw materials and wages. The research indicates that supermarkets, food manufacturers, and shipping companies are among hundreds of major firms that have improved their profits and protected shareholder dividends, giving an extra lift to prices, while the cost of living crisis has meant workers face the biggest fall in living standards in a century.
Analysis of the top 350 companies listed on the London Stock Exchange by a team of researchers at Unite, the UK’s largest private sector trade union, showed that average profit margins – a company’s revenue above the cost of sales – rose from 5.7% in the first half of 2019 to 10.7% in the first half of 2022. “This means the average profit margin of firms in the FTSE 350 jumped 89% in the first half of 2022 compared with the first half of 2019,” the report said.
In the UK, Tesco, Sainsbury’s, and Asda made combined profits of £3.2bn in 2021, almost double pre-pandemic levels, Unite’s report shows. Global food manufacturers such as Nestlé have also increased profits and margins over the last 18 months.
The report claims that higher profit margins are the result of ‘tacit collusion’ by large companies, adding to the prices of hundreds of goods and services that were already under pressure after the pandemic and Russia’s invasion of Ukraine.
Source: theguardian.com