Corporate profiteering is driving European inflation as wages lag badly, says prominent Asian financial service Nikkei.
In July alone, consumer prices of food and other products rose more than 10 per cent in Germany, for the 15th consecutive month, and inflation surged to over 14 per cent in Britain.
By one estimate, roughly 50 per cent of price increases in Europe stem from local companies passing higher costs on to consumers or jumping on the inflation bandwagon. As price increases outpace wage growth, consumption has sagged in the region.
Soaring food prices threaten livelihoods, Nikkei reports. A survey of households by the European Commission found the perceived rate of inflation over the past year has risen to 26 per cent among low-income families, the highest in 20 years.
The hardship posed by higher food and other prices has led to protests across Europe.
According to the Organisation for Economic Co-operation and Development (OECD), corporate profits in Germany rose 24 per cent from the last quarter of 2019 – before the COVID-19 pandemic – to the first quarter of 2023, while labour costs rose only 13 per cent. Similar trends can be observed in most other European countries.
OECD research has demonstrated that in Australia corporate profits have also been a major driver of inflation.
The ACTU has commissioned an “Inquiry into Price Gouging and Unfair Pricing Practices” to examine the cause and effects of price gouging on Australian working people.