In the fight against inflation, governments in Europe are scrutinizing company margins

Istanbul, Paris, Madrid, Stockholm In the fight against rising inflation, central bankers and politicians in Europe are increasingly focusing on corporate margins. Spain is creating a government entity that will connect data from different institutes and calculate and publish the margin per industry. France and Sweden are pushing supermarkets to cut prices.

These initiatives are based on assumptions that inflation is rising because companies are expanding their margins. There are sectors in which “input costs are falling while retail prices are rising and profits are also increasing,” ECB Executive Board member Fabio Panetta recently told the New York Times. “That’s enough to make central bankers concerned that inflation could pick up on rising profits.”

Paul Donovan, chief economist at the investment bank UBS, is also convinced: “The recent inflation is due to an unusual widening of profit margins.” The phenomenon is called greedflation – greed inflation.