“The ability of large groups to impose a price increase to maintain their margin rate explains the persistence of inflation” | EUROtoday

UA story is taking maintain: with inflation falling under 2%, the inflationary parenthesis triggered after the lifting of lockdowns attributable to the well being disaster would shut. And that is because of the far-sighted motion of central banks which might have allowed a “soft landing” by elevating their key rates of interest.

Apart from the truth that this might be a protracted interlude (about three years), the official indicator of inflation suffered by households (the evolution of the harmonised index of shopper costs (HICP), used at European degree) continues to be above 2%.

On the opposite hand, it’s the shopper value index (CPI) utilized in France, which has underestimated inflation for 3 years, which elevated by 1.8% (year-on-year) in August. It must be remembered that the HICP is a extra related indicator since, not like the CPI, it contains all merchandise paid for by households and excludes what’s paid for by public administrations.

A structural purpose fairly than triggers

Recent inflation will not be as a consequence of an “overheating” financial system pushed by extra demand that wanted to be “cooled” by larger rates of interest. It was attributable to a unfavorable provide shock (rising vitality costs, Covid-related provide chain disruptions). It has endured due to structural issues which are a lot deeper than these triggers.

Capitalist economies are more and more dysfunctional. This is manifested by a brand new slowdown in productiveness good points, and even by a decline in labor productiveness in some nations resembling France. This decline ought to have brought about the margin fee (the share of income in added worth) of firms to plummet.

In such a context, it’s the means of firms, notably the most important teams, to impose a value improve to keep up their margin fee that explains this persistence of inflation. In sure sectors, resembling vitality, refining, agri-food or maritime transport, the margin fee has soared: we are able to then communicate of actual “crisis profiteers” who feed inflation with their exorbitant income.

Protection of capital earnings to the detriment of earnings from work

Some figures illustrate this for the agri-food trade. Since 2017, hourly productiveness has fallen by 11%, actual wages have fallen by 6% and income have elevated by 18%. Result: costs have elevated by 30% and meals consumption has fallen by 9% in quantity. What is at stake right here is the distribution of earnings within the financial system between the remuneration of capital and that of labor.

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