Supermarkets, food manufacturers and shipping companies are being accused of indulging in “greedflation”- a practice of fuelling inflation with price increases that go beyond rising costs of raw materials and wages, thereby pushing shopping bills to record highs and in a way, partly responsible for rising prices.
Due to “greedflation”, these companies have improved their profits and protected shareholder dividends, giving an extra lift to prices, while workers face the biggest fall in living standards in a century.
Analysis of the top 350 companies listed on the London Stock Exchange by a team of researchers at trade union Unite showed that average profit margins – a company’s revenue above the cost of sales – rose from 5.7 per cent in the first half of 2019 to 10.7 per cent in the first half of 2022, The Guardian states.
“This means the average profit margin of firms in the FTSE 350 jumped 89 per cent in the first half of 2022 compared with the first half of 2019,” the report said.
Tesco, Sainsbury’s and Asda made combined profits of £3.2 billion in 2021, almost double pre-pandemic levels, Unite’s 170-page report shows. Tesco and Sainsbury, which together have a 43 per cent share of the grocery market, are on course to make large profits again this year. Tesco said it expected to make profits up to £2.5bn this financial year, and Sainsbury indicated that it would hit almost £700m.
Global food manufacturers such as Nestlé have also increased profits and margins over the last 18 months, states the report.
“Our research exposes where and how the economy is being rigged against workers – from supermarkets to energy bills, oil refineries to transport, we’re all paying the price,” The Guardian quoted Sharon Graham, Unite’s general secretary, as saying.
“The profiteering crisis isn’t just a few bad apples – it’s systemic across our broken economy. Entire industries are choosing to take advantage of a crisis, resulting in the spiralling prices of goods we all need.”
Reacting to the accusations, a spokesperson for Sainsbury’s said that the supermarket is “acutely aware of the pressures facing millions of households right now”, and our number one priority continues to be doing all we can to keep prices low for our customers.