A new Nikkei report finds that in Western Europe inflation continues to soar, as consumer prices are increasing 14% monthly in the UK by over 10% in Germany. The report went on to lay some of the blame at the feet of retailers, which it alleged are increasing prices out of proportion with the underlying costs of their businesses.
The outlets estimates indicated that about 50% of the increase in consumer prices was attributable to local companies passing higher costs on to consumers. As price increases have outstripped wage growth, consumption has slumped throughout the region.
The report pointed to an analysis by the management consultancy Oliver Wyman of the annual results of 70 food retail and manufacturing companies in Europe, which said in 2022, absolute EBITDA (earnings before interest, taxes, depreciation and amortization) increased by 11% at food retailers, and 12% at food manufacturers compared to the previous year. Increased revenues mostly drove the growth in prices.
Rainer Muench, partner at Oliver Wyman, said in the report, “Companies in the food sector viewed the inflation context as an opportunity to review their price management.”
Nikkei also cited IMF data which indicated that 45% of the inflation seen in Europe last year was due to growth in corporate profits, which was more than the 40% which was attributed to the increased costs of imports. The perceived rate of inflation for the past year was 26% higher among low-income families according to a survey by the European Commission, marking the highest reading in 20 years.
Bank of England Governor Andrew Bailey had made claims earlier this year that retailers were driving “greedflation” as specific businesses were “overcharging customers” while millions of families struggled with the burgeoning cost of living crisis. The Bank of England, and chief economist Huw Pill specifically, have told Britons that they are simply worse off now due to the economic conditions, and they need to accept that and cease asking for increases in their wages as that will only push prices higher.