Precisely this. "greedflation" is a political talking point - the reality is that companies will always seek to maximize profits. If consumers balk at paying, they're forced to lower prices.
The reality is that consumers have been demonstrating incredible resiliency and willingness to spend. As such, companies continue to charge.
Case in point: heavy goods like appliances. Prices spiked due to shortages during COVID, combined with the number of people updating their homes. Now, however, you can find some great deals on appliances beacuse inventory is back up and, consumer demand has dropped.
On the other hand: labor costs continue to escalate. Take home improvements - while the cost of inputs such as lumber, have dropped, the cost for labor is still elevated. The demand hasnt' slacked too much, but, there is still a shortage of skilled laborers and consumers are still willing to pay for home improvements.
In terms of inflation writ large, just wait until energy prices re-accelerate going into the spring. This also assumes there are no major shocks to the production system or transport of energy.
Housing is screwed because the entire real estate market has been artificially manipulated for the last 15 years. Unwinding this mess is going to take a lot of time - and, I suspect, voters won't allow politicians that much time. The inevitable result is that the government will put its hands into the real estate mix and skew the market even more than it already is.
Happy talk....
Quote:
Originally Posted by 2000cs
There really isn’t any such thing as greedflation unless you are a politician needing to blame others for your policies. All companies always want to raise prices but rarely can because of competitive pressures. Once one makes a move up, all can. Some industries (gasoline retail) this happens fast; others there are significant lags. Over the past 20 years there were many times companies bemoaned the inability to raise prices; once inflation started they all “caught up”.
Shrinkflation is just another implementation of inflation. Generally in consumer products. Consumers may have (or are believed to have) “price points” that cause them to consider substitutes, so rather than raising prices above that point, sellers reduce quantity. This avoids “sticker shock” that was a common issue in the inflation of the 1970s. And again, if no competitor will increase prices but costs are rising, the seller has to reduce size/quantity. Most consumer products have a “price leader” in their category - big enough market share that they can set the price and all others will follow or stay just below. In cars in the US it used to be GM/Chevy, for example. Until they move up, everyone else suffers reduced margins or lowers content.
Sorry to be pedantic, just wanted to clarify this a bit.
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