Corporate greed not to blame for price pressures, Fed study shows

Corporate price gouging has not been a primary driver of U.S. inflation, according to research published on Monday by economists at the Federal Reserve Bank of San Francisco.

While markups for motor vehicles and petroleum products did rise sharply during the 2021-2022 inflation surge, markups across the entire spectrum of U.S. goods and services have been relatively flat during the post-pandemic recovery, the bank's latest Economic Letter showed.

"As such, rising markups have not been a main driver of the recent surge and subsequent decline in inflation during the current recovery," wrote the bank's research chief Sylvain Leduc and colleagues Huiyu Li and Zheng Liu.

Inflation by the Fed's targeted measure, the year-over-year change in the personal consumption expenditures price index, peaked at 7.1% in June 2022 and has since fallen, registering 2.7% in March.

U.S. President Joe Biden has blamed corporate greed for still-elevated prices, accusing companies of boosting profits by shrinking portion sizes but leaving the selling price unchanged, and by failing to pass on falling costs to consumers.