THE PANDEMIC:
The Pandemic Introduced New Pricing Dynamics Recent Price-Hiking Strategies Have Taken Advantage of the COVID Era
By economists own admission, corporations have always been greedy and have applied various price-hiking strategies whenever the opportunities arose. When the pandemic arrived stateside and the continent followed the world into lockdown mode, the businesses suffered at first since everything was shut. However, as the world came up with new protocols and operation strategies, businesses not only opened again over the next few months, but more than made up in recovery through various price-hiking strategies. Same thing happened this year as the Ukraine-Russia war left a strain on supplies, driving up Producer Prices inflation. The infographics below present the strategies observed in various federal reports and those collected directly from company officials in earning calls by the Groundwork Collaborative.
Rockets & Feathers
1 . Assymetric Pass-Through
The most alarming strategy which explains massive inflation. Prices shoot up like a rocket as soon as production costs justify a hike. But as producer prices inflation eases, the markups at the consumers end only come down in light feathers. Federal Reserve Vice Chair Lael Brainard noted in September that the data has not so far shown business reducing markdowns in response to economic factors.
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