The profit crisis is the inflation-driving pressure we don't talk about
ABCInterest rates, the Russian war in Ukraine and a supply chain crunch are all blamed for surging inflation that is eroding the value of worker's pay packets. Key points: One factor pushing inflation is companies making high profits The rate of profit growth has vastly out-paced wage growth Inflation reduces the purchasing power of wage earners "The strength in profits has come despite firms facing very elevated cost pressures," NAB senior economist Brody Viney said. "The broadening of inflation beyond commodity prices is more profit margin expansion than wage cost pressures," he said. Dr Denniss said rising wages costs have played an "insignificant role" in the recent inflation spike. NAB's Brody Viney says corporate profits have grown "very strongly" in 2022, pumped by a COVID rebound and high commodity prices.
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