The economy often appears to be a large, ramshackle institution, a law unto itself. This is partly due to the skills of those who really control it and partly because it is both a large ramshackle institution and a law unto itself. If the economy was only made up of money, it might be easier to make a case for saying that it can be controlled, if not managed, at some level. The truth is that the economy comprises much more than mere money and is constantly manipulated by economic factors that strengthen the relative strengths of one component over another.
Research carried out by Unite the Union (https://www.unitetheunion.org/media/5452/unite-investigates-profiteering-across-the-economy-its-systemic-march-2023.pdf) suggests that pre-emptive, predatory pricing by FTSE 350 companies is fuelling a secondary surge of inflation within the wider economy as prices rise to reflect the fevered state of the market. The result of the economic upheaval has been a strengthening of corporate profitability, which doubled between financial years 2019 and 2021, according to Unite’s analysis of 230 non-energy FTSE 350 companies. The union gives an example of how pre-emptive price rises, known as “price gouging” could arise in the food industry. Suppose a bottle of sunflower oil costs two pounds delivered to a multiple retailer’s Regional Distribution Depot (RDC) and the product incurs a 10p price rise due to the war in Ukraine (supply side impact); a further 10p price rise arising from increased haulage costs and 10p due to the importers’ administrative costs. There are three options open to the retailer: either to absorb some or all of the increase in its operating cost; or pass on the price rise to customers or impose a price rise that includes an additional percentage for contingencies, referred to as “price gouging.”
Unite claims that retailers such as Sainsbury are happy to accuse rivals of price gouging, but will not admit to it themselves. On April 28 2022 Sainsbury chief executive Simon Roberts announced operating profits of GBP730 million, with a side swipe at his rivals, declared that: “…competitors are inflating ahead of the market.”