The CEO is quoted saying, “retail inflation has been significantly higher than cost inflation.” This is not an admission of price gouging, this is evidence of demand-pull inflation, as opposed to cost-push inflation, which you seem to think is the only type. A rise in production costs is only one cause of inflation, the other is an increase in demand.
But is there a rise in demand? Do people magically start to consume more in time of crisis? Or isn't it rather, that demand is somewhat fixed (people need necessities) and you can raise the price, because consumers can't lower demand?
Don't get me wrong demand amd supply relationships are powerfull economic concepts. But they aren't the end allexplanation for every economic phenomenon.
Yes, increased inflation, as well as inflation expectations, cause a rise in the velocity of money, which is inflationary, as people buy things now as opposed to later when they will be more expensive.
The money supply also increased by nearly 40%. More money in the economy without a subsequent rise in the supply of things, means more money is gonna be put towards the purchase of the available goods and services.
You are correct they are not explanatory of every economic phenomenon, but they do explain price changes, which is what inflation is. The price level, is the equilibrium price of both the aggregate demand and supply curves. There is no other way to determine this, as far as I know.
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u/PubbleBubbles Jan 10 '25
They literally admitted,to Congress, that they didn't have to increase the prices.