Risk, returns & timeframes illustration
1 min read
April 3, 2023
by
Belinda Nash

Is corporate greedflation driving price gouging? 🤑

Kiwis could be paying eggstra at the supermarket right now, but are times actually tough for companies or are some caught in a cycle of greedflation? Price hikes are typical during a crisis, but after the peak do prices drop to help consumer wallets, or do corporates simply fatten theirs?
Risk, returns & timeframes illustration
1 min read
April 3, 2023
by
Belinda Nash

Is corporate greedflation driving price gouging? 🤑

Kiwis could be paying eggstra at the supermarket right now, but are times actually tough for companies or are some caught in a cycle of greedflation? Price hikes are typical during a crisis, but after the peak do prices drop to help consumer wallets, or do corporates simply fatten theirs?
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Feel like Aotearoa’s supermarket duopoly’s inflated prices may leave you with no eggs in your basket this Easter - choccie or hen’s? 🥚 We may not be the only country feeling scrambled as eggflation appears to outpace inflation. Are some companies really cooking the books to sell the same products we bought last year for eggstra today? 

Sure, there’s been the post-pandemic recovery, a war that won’t wane, apocalyptic weather, and erm, shoplifters…? But have corporate price-setters become price-fixers feathering their nest using ‘excuseflation’ to mask old-fashioned capitalist greed? 💰 Bird flu fried the US egg market, but America’s largest egg producer Cal-Maine Foods (CALM), which controls 20% of the market, managed to escape the deadly virus. 🍳 Yet despite many of their costs remaining the same, they ‘jacked up’ egg prices, whipping up profits 718% last quarter.

Chicken-wing chain Wingstop (WING) was another company among a list of all-America favourites outed this March by the Bloomberg Odd Lots podcast. 🐔 In 2021 when wholesale chicken wing prices soared 125%, Wingstop raised their prices yet suffered no consumer pushback. Today, while their costs have dropped 50%, rather than pass relief back to hungry customers, they’re actually planning 2-3% price increases. And their stock is flying - 232% up since March 2020. Podcast guest Corbu managing director Samuel Rines suggested that once a company discovers what their consumer is ‘willing to pay’, there’s little motivation to reverse price hikes. 

Another accused of being less than real with their pricing is PepsiCo (PEP). 🥤 After their March 2022 exit from selling soft drinks in Russia, PepsiCo made up a shortfall in sales by charging worldwide consumers more. Something that may have contributed to the Corporate America food and beverage giant’s share price fizzing up 18% since then.

Bargain brands Home Depot (HD), Walmart (WMT) and Dollar Tree (DLTR) could also be caught in a cycle of greedflation according to the podcasters. It may have been good for investors, but with Walmart closing 15 ‘underperforming’ stores, can these discount golden geese keep laying forever? 🤷

Belinda Nash
Finance writer
Linkedin

We’re not financial advisors and Hatch news is for your information only. However dazzling our writing, none of it is a recommendation to invest in any of the companies or funds mentioned. If you want support before making any investment decisions, consider seeking financial advice from a licensed provider. We’ve done our best to ensure all information is current when we pushed ‘publish’ on this article. And of course, with investing, your money isn’t guaranteed to grow and there’s always a risk you might lose money.

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