In other words, they found that very many companies undertaking a wide range of activities were subject to significant price pressure pressure as a result of increasing raw material costs and higher energy prices which resulted in a decline in their profit margins. Those companies have to be those most exposed to competitive marketplaces.
In contrast, those companies with significant market power in areas where vertically integrated supply chains are commonplace or there is significant oligopolistic power, who just happened to be in the energy and retail (for which read food supply chain) markets, were able to exploit those market positions to increase their profitability quite considerably.
Has the cretin never heard of “commodity”. Even, commodity producers, who have a largely undifferentiated product and must therefore simply take the market price for their production. That is, they’ve not got market power? Like, umm, energy companies? Ever noticed how the oil price jumps up and down globally, all at the same time? Quite, it’s a commodity.
It’s not greedflation that increases profits in a commodity firm. It’s the price elasticity of both supply and demand.For oil and gas really rather inelastic in the short to medium term.
Jeez, this is real basics of priceing theory here and yet he’s inventing “greedflation” to explain it?
Always nice to look at something and gain a brilliant insight that you’re sure no one has seen before.
And then you realise that one and one is two has been known for quite a while.
Raw material and energy costs have stabilised. Inflation is now driven mostly by government. It’s not your plumber who pays the ULEZ charge, it’s you.
I wonder about the risk benefit analysis of crossing the ULEZ boundary.
Say you live outside the boundary but travel into Bromley to work – risk by banger car is a £12.50 fine, going by bus, bike, lift share whatever lacks flexibility and costs you let’s say £10 of your time.
If getting a charge carries a less than 80% risk then you still going to go by your non-compliant car. You evil paid killer.
If you are charged, do they have to prove it with a photo – then you can work out where that camera is – message the CamSnippers on social media anonymously – and your odds will be lower same time next week.
It’s not your plumber who pays the ULEZ charge, it’s you.
Indeed. With our customers Congestion Charges appeared on invoices as a separate & unadjusted item. It’s important people should know exactly who is ripping them off.
May well be the cam snippers might be the very best of a British revolt. We don’t go in for the continental style of rioting properly at the drop of a hat, but enough cam snipping and it will become abundantly clear to TPTB that they don’t really have the public behind them on this one…
P-G: Sadly I don’t think Khan cares a fig what people think. And even if he’s spending lots more on ‘maintenance’ than he budgeted, he still won’t back down.
Shows the ludicrous situation we’ve gotten into when a government with a massive majority just washes its hands and says we can’t do anything the courts would over rule us.
The blocking of democracy by civil servants and the courts is ever increasing
The “conservative” government could use its massive majority and block it, if it wanted to. If the courts objected it could override and change the law, if it wanted to.
But he has a point in the food retail sector. You point to profit margins being the same as they were previously as evidence that there is no greedflation, I see that as evidence that there IS greedflation. In a time of high input inflation, if you are managing to maintain your profit margin you must have considerable pricing power – the ability to raise prices regardless. If food retailing were a true competitive market then the inflation we have seen should have decimated their profit margin, but it didn’t. Ergo the supermarkets are an oligopoly that can raise prices at will with no consequences. The only reason they haven’t raised them even more is political – they fully well know if they make it obvious that the State will whack them with extra taxes and regulations. So they keep things very much on an even keel, gouging the consumer (and producers) as much as they can without raising too much suspicion.
Sage maternal advice: You’ll make it worse if you Pickett.
Hat, coat…
“Sainsbury’s retail profit margin was 3.4% pre-pandemic in 2019-20 and 2.99% last year. Tesco has just turned in 3.8%, compared with the 5% it used to aim at. These numbers are miles below what the global food and drink manufacturers achieve. Unilever, the global Dove-to-Domestos titan, has just reported 16%.
As for ROCE, Sainsbury’s achieved 7.6% last year, which conventional financial wisdom would deem pathetic when general inflation is 10%. The ratio helps to explain why shares in Sainsbury’s, even after a better run over the past six months, stand roughly where they were at the start of this century – yes, century.”
https://www.theguardian.com/business/nils-pratley-on-finance/2023/may/08/uk-supermarkets-profiteering-sainsburys-tesco
Historically there has been a decline in supermarket profit margins from around 7% to 2-3% with the expansion of Lidl / Aldi in the UK
https://www.theguardian.com/business/2019/mar/05/long-read-aldi-discount-supermarket-changed-britain-shopping
It all sort of gives the lie to those screeching about eeevil price gougers when you actually look at the figures.