Manuel Bompard denounced the behavior of big companies, which he accuses of causing inflation, in an interview with Sud Radio on Tuesday June 27.
The coordinator of la France insoumise criticized the role of large companies in the increase in prices that we have known for more than a year. “There’s an IMF study that says about three-quarters of inflation is due to big business rising profit margins and rising profits”he assured, Tuesday, June 27, on South Radio . Really ?
45% of inflation due to margins in Europe
Manuel Bompard inflates the figures a little. In an article published on June 26, the International Monetary Fund (IMF) indicated that corporate margins and profits had contributed to 45% of inflation since last year in Europe, therefore a little less than half, and not three-quarters as the deputy of Bouches-du-Rhône says.
Nevertheless, we can concede to Manuel Bompard that profits are indeed the first cause of inflation in Europe, ahead of the rise in the price of raw materials, responsible for 40% of inflation, and before the third, the increase labor costs, including wages.
In other words, this means that on a European scale companies have increased the prices of their products more than strictly necessary. Selling more expensive items and food didn’t just help them break even or offset the rising cost of energy, wheat, sugar or whatever. This has mainly allowed companies to make money.
Commodities remain the main cause of inflation in France
However, what is true on a European scale is not always true on a French scale. In France, according to the last two INSEE economic reports of March and June 2023, the rise in the price of raw materials seems to remain the main cause of inflation. Increasing corporate margins comes second.
INSEE explained in March that in 2022, “the unit cost of inputs continued to constitute the main contribution to the evolution of the price of production of the non-agricultural market branches, but the unit gross operating surplus also contributed significantly to its dynamics”.
In other words, margins are not the main cause of inflation in France, but they contribute to it. The institute explains that this is a carry-over effect: agri-food companies in particular had reduced their margins in 2021, at the start of this episode of inflation. They kind of absorbed the extra cost of the inputs. Companies therefore caught up afterwards, again increasing their margins.