Greed inflation myth? What can be learned from the margins of large corporations

Dusseldorf Inflation, which has been high since the Ukraine war, is reducing the trading margins of most listed companies in Germany. This is the result of extensive balance sheet analyzes by the Handelsblatt. The assumptions of consumer protection groups and some economists that companies would increase their profits with exaggerated price increases seem to come to nothing, at least in the case of these large corporations.

Among the companies affected are not only the car manufacturers VW, BMW and Mercedes-Benz, but also all listed consumer goods groups, from Henkel and Adidas to Metro and Media-Saturn. For them, the costs of production and purchasing of goods rose more sharply than the turnover itself in 2022. The remaining gross profit margins, also referred to as “margins” in many companies, fell accordingly.

The credit insurer Allianz Trade, for example, recently claimed that around ten percent of the cost increase in Europe was due to manufacturers’ “hunger for profit”. Starting in the USA, where “greed inflation” has been discussed for some time, the buzzword “greed inflation” is also making the rounds in this country.