Understanding the Challenges to Affordability: Headline Inflation vs. Perennial Inflation

S3T PERSPECTIVE

Affordability and financial equality often take center stage in corporate mission and vision statements, promising a brighter future for customers and society. Yet, for these aspirations to become more than just words, leaders must possess a deep understanding of how inflation and affordability truly operate—and how their decisions may unintentionally undermine these noble goals.

Corporate pricing power is a key contributor to perennial inflation 

Pricing power refers to a company's ability to raise prices without losing customers. While this can drive profitability, it often contributes to inflation and affordability issues. Understanding the different types of pricing power and their impact is crucial for leaders, especially in regulated industries.

In recent years, at long last, there has been a growing realization that corporate profits are a primary driver of inflation today. So why have establishment economists had a long history of scapegoating wage earners rather than corporations? Because in the words of this economist: “we don’t have as much and as good data on profit as we do on wages.”