'Greedflation': The Rising Cost of Living Driven by Corporate Greed

The issue of “greedflation,” a phenomenon where profits exceed inflation and create a significant rise in the cost of living due to corporate profiteering, was recently explored in a Money.ca study. It revealed corporate greed significantly drives up the cost of living for Canadians.

“Some economists dismiss ‘greedflation’ as a buzzword,” says Cory Santos, finance editor, Money.ca and the report’s author. “But what do you call it when official figures show declining inflation, prices still rise (and) corporate profits soar while the average Canadian’s savings dwindles?”

Santos explains that financial education and smart budgeting techniques are the best defense against exploitation and the key to long-term financial security. “By learning and utilizing these best practices, Canadians can gain the knowledge and skills to navigate ‘greedflation’.”

Corporate profits contributed over 50% to inflation in 2023, but it was 11% pre-pandemic

Since the pandemic, Canadians have experienced a steep rise in the cost of living. Inflation hit 6.8 per cent in June 2022, the highest in nearly 40 years. Although inflation has stabilized at 2.3 per cent as of May 2024 (the country’s average from 1915 to 2024 is 3.15 per cent), prices in some industries remain high.

A report from Groundwork Collaborative states that corporate profits contributed 53 per cent to inflation in 2023’s second and third quarters, but this was 11 per cent of the pre-pandemic price growth. FactSet, a U.S.-based financial data company, notes that the profit growth rate for S&P 500 companies is 9.8 per cent, the highest year-over-year earnings growth rate in years.

Key findings

Here are some of the report’s key findings:

Inflation driven by corporate profits. Companies increased prices much faster than any increase in their costs and contributed very high shares to inflation. This contrasts the position that corporate greed contributed about 10 per cent to 2021’s inflation.

Increasing costs passed on to consumers. Large companies are streamlining budgets to maximize profits and passing additional shipping costs to consumers through higher prices.

Impact on consumers. Inflated prices have had a strong impact on essential commodities like food and fuel. For example, while general food inflation peaked at 8.8 per cent in 2022, prices remain high. Despite the inflation rate decreasing, food prices are not. The average cost of food for a family of four will be $16,297.20 in 2024, up $701.79 from 2023.