You may have heard the word “greedflation” popping up lately. It’s a mashup of “greed” and “inflation” and it points the finger at businesses, accusing them of pushing prices up to boost profits — especially during times when people are already struggling with the cost of living.
But is that really what’s going on? Are companies in the UK cashing in on inflation, or is the story more complex?
Let’s break it down.
What Is Greedflation?
Greedflation is the idea that some companies are using current economic pressures — like rising energy costs or supply chain problems — as an excuse to raise prices more than necessary, just to make extra profit.
While it might sound like a conspiracy theory, it’s not just a social media buzzword. Economists at the European Central Bank (ECB) have actually looked at the numbers and found that corporate profits have played a noticeable role in rising prices across the eurozone.
How Do You Measure It?
Normally, when we talk about inflation, we look at something called the Consumer Price Index — basically, how the cost of everyday goods like food, gas, and rent goes up over time. But that doesn’t tell us who is benefiting from those price hikes.
To dig deeper, economists use something called the GDP deflator — a broader measure of inflation that includes profits, wages, and taxes. It shows not just that prices are rising, but why they’re rising.
According to ECB data, corporate profits in the eurozone (the red bars on their chart) have been a big driver of price increases in recent years — even more than wages.
What About the UK?
Sky News did a similar analysis using UK data and found a slightly different story. Yes, profits have contributed to rising prices — especially in the final quarter of 2022 — but not as much as in the eurozone.
In fact, for most of the recent inflation period, wages and taxes were bigger factors in the UK than business profits.
So, while businesses here have raised prices, there isn’t strong evidence to say they’re the main cause of inflation in the UK — at least, not yet.
Is This Just How Markets Work?
Some argue that raising prices when demand is high is just standard business practice. That’s how markets work. If a product is in demand, prices go up. It doesn’t always mean companies are being greedy.
But others say the current environment — where people are already stretched thin — should call for more corporate responsibility.
What’s the Takeaway?
In the eurozone, profits are a major driver of recent price hikes.
In the UK, the data doesn’t show the same level of “greedflation.”
Wages and taxes have played a bigger role in UK inflation so far.
The story could still change — the data often lags behind real-time changes.
While it may feel satisfying to blame businesses for the cost-of-living crisis, the numbers suggest the truth is more complicated. Greed may be part of the problem — but it’s not the whole picture.
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