How ‘Excuseflation’ Is Keeping Prices — and Corporate Profits — High
One-off disruptions can provide cover for companies to keep prices high.
A shopper holds a shopping basket with groceries inside a grocery store in San Francisco, California, U.S.
Photographer: David Paul Morris/Bloomberg“Whether it’s rye flour, or bird flu that impacts eggs,” said Ken Jarosch, the owner of Jarosch Bakery, “when it makes national news, just running a business, it’s an opportunity to increase the prices without getting a whole bunch of complaining from the customers.”
It’s not the kind of thing you typically hear a business owner express publicly but Jarosch was simply stating late last year his philosophy about when it’s safe for a business such as his — a midsized bakery in the Chicago suburbs — to hike prices for cookies, cakes and other carbs. He had the idea long before Covid upended supply chains, realizing he could quickly push through price increases when news hits of some big shock to the economy because there’ll be less pushback from customers right then.
Now, a growing body of analysts and researchers see this pattern playing out across Corporate America, with companies using unusual disruptions as an excuse to raise prices for their goods and services, thereby allowing them to expand profit margins.