Journal Article

How Much Have Record Corporate Profits Contributed to Recent Inflation?

Abstract: Andrew Glover, José Mustre-del-Río, and Alice von Ende-Becker present evidence that markup growth was a major contributor to inflation in 2021. Specifically, markups grew by 3.4 percent over the year, whereas inflation, as measured by the price index for Personal Consumption Expenditures, was 5.8 percent, suggesting that markups could account for more than half of 2021 inflation. However, the timing and cross-industry patterns of markup growth are more consistent with firms raising prices in anticipation of future cost increases, rather than an increase in monopoly power or higher demand.

Keywords: inflation; macroeconomics; Corporate profits;

JEL Classification: E44; E31; G3;

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Bibliographic Information

Provider: Federal Reserve Bank of Kansas City

Part of Series: Economic Review

Publication Date: 2023-01-12

Volume: vol.108

Issue: no.1

Pages: 13