Mar 10, 2022
Many of the most profitable U.S. corporations are raising prices under the pretext of inflation to boost profits and shareholder returns at the expense of consumers, an analysis published Thursday revealed.
"Despite what they claim, these highly profitable businesses do have a choice, and they're choosing to fatten their bottom line rather than keep consumer prices stable."
Thirty leading companies in major categories of the U.S. Bureau of Labor Statistics' Consumer Price Index (CPI)--including food, energy, commodities, healthcare and shelter--have hiked prices while collectively increasing their profits by $151 billion, according to the analysis by the watchdog group Accountable.US.
"Across nearly every single industry that is measured for price changes, we're seeing highly profitable corporations demand more money for consumer staples that families depend on without a good reason why," said Accountable.US president Kyle Herrig in a statement.
"These companies would have consumers believe they marked up prices just to keep up with outside costs," he added, "but the tens of billions in extra profits and generous giveaways to investors last year show otherwise."
\u201cNEW: Rising inflation has left plenty of American families struggling\u2014but top consumer companies in the US have increased their profits by $151 billion at their expense. https://t.co/kJ7Cb0az33\u201d— Accountable.US (@Accountable.US) 1646924635
According to Accountable.US:
Adding insult to injury, these same companies increased spending on shareholder handouts like stock buybacks and dividends by 25%, totaling over $140.6 billion--raising serious questions whether industry price hikes correspond with their own added costs during the pandemic given the staggering level of profit they are enjoying and their extreme generosity to shareholders.
"It simply doesn't add up," Herrig said. "Despite what they claim, these highly profitable businesses do have a choice, and they're choosing to fatten their bottom line rather than keep consumer prices stable."
According to the report:
- As grocery prices increased 6.5%, the country's largest supermarket chains--Walmart, Kroger, and Costco--benefited from price increases while seeing their fiscal year net incomes increase by a total of $238 million and increasing stock buybacks and dividends by over $12 billion;
- As gasoline prices increased 49.6% in 2021, the three biggest U.S. oil companies--ExxonMobil, Chevron, and Marathon Petroleum--benefited from higher prices, seeing previously negative profits jump nearly $87.5 billion while boosting shareholder handouts by over $4.5 billion in FY 2021;
- As gas and electric utility prices climbed 24.1% and 6.3% respectively, the three biggest U.S. gas and electric companies--Exelon, Duke, and Southern Company--all benefited from higher rates, with profits climbing by $1.64 billion while spending $7.3 billion on shareholder handouts in FY 2021; and
- While medical care prices increased 2.2%, the biggest drugmakers--Johnson & Johnson, Pfizer, and AbbVie--saw profits jump by over 90% to $54 billion while boosting shareholder handouts by nearly $2.6 billion in 2021.
Accountable.US found similar profiteering in sectors ranging from automobiles to apparel to health insurance and housing.
The new report comes as progressive lawmakers on Thursday blasted Big Oil for profiteering during Russia's invasion of Ukraine, with Reps. Pramila Jayapal (D-Wash.) and Barbara Lee (D-Calif.) accusing fossil fuel companies of "shamelessly" using the crisis to "raise the prices of goods and services most in need."
\u201cThe answer is simple, yes inflation is a factor, but major corporations are posting record profits by using inflation as a smokescreen to hike costs and pad their wallets.\nhttps://t.co/0ZOvD0iPN3\u201d— Rep. Pramila Jayapal (@Rep. Pramila Jayapal) 1646940600
On Thursday, Sen. Sheldon Whitehouse (D-R.I.) introduced the Big Oil Windfall Profits Tax "to curb profiteering by oil companies and provide Americans relief at the gas pump."
Co-sponsor Sen. Bernie Sanders (I-Vt.) said that "we can no longer allow big oil companies, huge corporations, and the billionaire class to use [Russian President Vladimir] Putin's murderous invasion of Ukraine and the ongoing pandemic as an excuse to price gouge consumers."
Jayapal and Lee urged their colleagues to quickly pass an expanded version of Rep. Jan Schakowsky's (D-Ill.) Covid-19 Price-Gouging Prevention Act to include fuel and energy prices.
"It's frightening to think how many CEOs are asking themselves, 'If that company is getting away with profiteering during a pandemic, why can't we?'" said Herrig. "It's all the reason Congress needs to act now on President [Joe] Biden's agenda to crack down on industry overcharging, straighten out the supply chain, and ensure greedy corporations finally pay their fair share in taxes."
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