‘Greedflation’ Statistics & Trends 2024

What Is ‘Greedflation’?

“Greedflation” is roughly defined as excessive price increases that companies roll out to take advantage of an inflationary situation and grow their profits.

The term is said to have morphed out of “seller’s inflation,” a theory proposed in a 2023 paper by Isabella Weber, an economist at the University of Massachusetts Amherst. Weber first floated the idea in an opinion column in the Guardian in 2021 ^{[ ]}. She wrote that one reason inflation was so high at that time was that corporations were enjoying an “explosion in profits” as they saw an opportunity to greatly boost their prices amid supply problems stemming from the pandemic.

In her later paper ^{[ ]}, Weber and a colleague said what was going on was seller’s inflation: that businesses were hiking prices purely because they could, at the expense of consumers. This scenario was initially dismissed—even criticized as a “conspiracy theory.^{[ ]}” But the notion of greedflation hasn’t gone away and remains a topic of concern and debate.

Shrinkflation vs. Greedflation

In “shrinkflation,” corporations shrink the size of their products but continue to charge the same prices for them. Companies, mainly those in the food and beverage industries, employ this tactic to quietly boost—or at least maintain—profits.

Greedflation occurs when the product remains the same, but the company hikes the price to generate more profits. The idea is that even though production costs haven’t risen enough to justify price increases, companies carry out price increases anyway to improve their bottom lines.

What Is Inflation? And What Is the Current Inflation Rate?

Inflation is the increase over time in the overall cost of goods and services purchased by consumers. Inflation is usually measured during a one-year period; the government has several methods for tracking it, including with a monthly report called the consumer price index, or CPI.

According to the CPI released by the U.S. Bureau of Labor Statistics in January 2024, the nation’s inflation rate was 3.4% over the course of 2023 ^{[ ]}.

How Much Have Prices Risen?

The inflation rate means prices for consumer goods and services rose 3.4% from the end of 2022 to the end of 2023. Put another way, an item that cost $1,000 in December 2022 would have cost $1,034 in December 2023. The annual inflation rate has been coming down: Prices jumped 6.5% in 2022 ^{[ ]} and 7% in 2021 ^{[ ]}.

How Much Have Corporate Profits Risen in the Last Two Years?

Data from the federal Bureau of Economic Analysis shows corporate profits shot up 9.8% in 2022 and soared 22.6% during 2021^{[ ]}. Annual data for 2023 is pending.

Which Industries Were the Most Profitable in 2023?

Companies in the Fortune 500 piled up $2.9 trillion in profits in the fiscal year that ended March 31, 2023, according to one analysis^{[ ]}. These were the most profitable U.S. industries:

• Technology: $306.0 billion
• Energy: $179.2 billion
• Healthcare: $154.8 billion
• Financial: $138.9 billion
• Transportation: $73.6 billion
• Retail: $48.9 billion

How Much Has Annual Spending Increased for Consumers?

In 2022, average annual expenditures for U.S. consumers grew by 9.0% to $72,967^{[ ]}. This total was up $6,000 from 2021 and up nearly $10,000 (15.7%) from 2019.

Significantly higher U.S. inflation began to take hold in the midst of the Covid-19 pandemic in 2021. It began to cool in 2023, however it’s still above the Federal Reserve’s target annual inflation rate of 2%.

U.S. Inflation Rate – Historical CPI Data

Year	Inflation Rate
2023	3.4%
2022	6.5%
2021	7.0%
2020	1.4%
2019	2.3%
2018	1.9%

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Source: U.S. Bureau of Labor Statistics Consumer Price Index

Consumer spending trends over the past three years show several categories, including food and shelter, saw substantial spending increases as prices rose.

Average Consumer Spending in 2022

The average consumer’s overall expenditures totaled $72,967 in 2022, up 9% from 2021 and 15.7% from 2019^{[ ]}. These were the annual percentage changes in spending for the 14 major spending groups that the Bureau of Labor & Statistics (BLS) tracks each year:

• Cash contributions: +14.1%
• Food: +12.7%
• Personal care products and services: +12.3%
• Transportation: +12.2%
• Personal insurance and pensions: +11.0%
• Apparel and services: +10.9%
• Education: +8.9%
• Tobacco products and smoking supplies: +8.8%
• Housing: +7.4%
• Healthcare: +7.3%
• Alcoholic beverages: +5.2%
• Reading: +2.6%
• Miscellaneous: +2.3%
• Entertainment: -3.1%

Entertainment was the only major expenditure category that didn’t see an increase in average consumer spending in 2022. However, the BLS notes that this decrease was partly a correction to the massive spike it saw in 2021.

Average Consumer Spending in 2021

In 2021, average consumer spending reached $66,928, up 9.1% from 2020^{[ ]} The effects of the pandemic started to become more apparent in 2021 as prices for goods and services began to soar. It was the first time in five years that the percentage change in consumer expenditures exceeded 5%. Here were the percentages for each major spending category:

• Entertainment: +22.7%
• Apparel and services: +22.3%
• Personal care products and services: +19.3%
• Alcoholic beverages: +15.9%
• Food: +13.4%
• Transportation: +11.6%
• Personal insurance and pensions: +8.7%
• Miscellaneous: +8.7%
• Tobacco products and smoking supplies: +8.3%
• Cash contributions: +5.8%
• Housing: +5.6%
• Healthcare: +5.3%
• Reading: +0%
• Education: -3.5%

The entertainment category and the apparel and services category both benefited from easing pandemic restrictions in 2021, with each sector notching over 20% year-over-year growth in consumer spending. Personal care companies and alcoholic beverage companies had banner years as well with both categories growing by more than 15%.

Average Consumer Spending in 2020

Consumer spending in 2020 declined by 2.7%, making this only the third time that average annual expenditures had fallen since 1984, according to the Bureau of Labor Statistics^{[ ]}. Average consumer expenditures in 2020 totaled $61,332. These were the year-over-year percentage changes by category:

• Apparel and services: -23.8%
• Personal care products and services: -17.8%
• Alcoholic beverages: -17.4%
• Education: -11.9%
• Food: -10.4%
• Transportation: -8.5%
• Entertainment: -5.8%
• Tobacco products and smoking supplies: -1.6%
• Healthcare: -0.3%
• Miscellaneous: +0.9%
• Personal insurance and pensions: +1.1%
• Housing: +3.5%
• Cash contributions: +14.4%
• Reading: +23.9%

Nearly all major spending categories saw declines in 2020, with housing and reading among the few key exceptions.

Corporations initially launched small price increases to deal with rising demand during the pandemic, supply squeezes, and higher food and energy costs linked to the Russia-Ukraine war. But many companies later cranked up the increases, making numerous consumer products and services more expensive.

Corporate profits began to rise rapidly in the middle of the second quarter of 2020 before reaching a peak in the second quarter of 2022, and then continuing to trend upward through the end of 2023.

• Inflation-adjusted real gross domestic product—used to measure the growth of the U.S. economy—climbed 2.5% in 2023, according to estimates from the Bureau of Economic Analysis. That’s above the 1.9% increase in GDP in 2022^{[ ]}.
• The BEA attributes some of the increase in GDP to the rise in consumer spending, particularly for healthcare services, recreational goods and vehicles.

Brands That Have Raised Prices

As corporate earnings reports have rolled out in recent years, many brands have been accused of contributing to greedflation and engaging in corporate profiteering.

Accountable.US, which describes itself as a nonpartisan watchdog group, analyzed earnings data for the 10 largest retailers by market capitalization in April 2022 and found that not only did they raise consumer prices, but they collectively reported $24.6 billion in higher profits during their most recent fiscal years^{[ ]}. The following brands were cited for excessive net profit increases:

• Amazon
  • Saw its net income increase by more than $12 billion in 2021, to over $33 billion
  • CEO pay ratio—comparing the chief executive’s pay to that of the company’s typical worker—increased from 58-to-1 to 6,474-to-1
• Walmart
  • Saw net income increase by $163 million in the company’s 2022 fiscal year to over $13.6 billion
  • Shareholder payouts grew by $7.2 billion, to nearly $16 billion in 2022
  • Planned to spend at least $10 billion on stock buybacks in fiscal 2023
• Home Depot
  • Reported a 27% increase in annual net earnings
  • Boosted stock buybacks by $14 billion and spent nearly $7 billion on shareholder dividends
  • Planned to increase quarterly dividends by 15%
• Costco
  • Posted record-breaking $5 billion in net income
  • Boosted shareholder payouts by more than $4.5 billion to over $6.2 billion
  • Continues to see spikes in profits after earning $1.2 billion in net income in the second quarter of fiscal 2022, up $348 million from the previous year
• Lowe’s
  • Saw 2021 net income jump 44% to $8.4 billion while spending $15.1 billion on shareholder payouts, including stock buybacks that were $1.1 billion higher than expected due to better-than-anticipated financial performance
• CVS Health
  • Posted more than $7.8 billion in 2021 net income
  • Authorized a $10 billion buyback program and spent $2.6 billion on shareholder dividends
• Target
  • Saw net earnings rise 59% in 2021
  • Used profits to boost buybacks by 887% while spending $1.5 billion on shareholder dividends

Other evidence of potential greedflation:

• During one three-month period in 2022, Nestle hiked prices 9.5% and Procter & Gamble raised them 9%^{[ ]}. The companies represent two of the world’s largest consumer brands.
• Coca-Cola bumped up prices by 11% in 2022, and Kraft Heinz notched a more than 15% price hike^{[ ]}.
• As Tyson Foods reported surging profits in May 2022, its CEO told reporters the company was “asking customers to pay for inflation.”

In recent years, corporations may have adjusted operations or prices in the face of various challenges, such as supply chain problems. Still, some lawmakers believe big companies are taking advantage of circumstances to drive up profits.

While 37 states prohibit price gouging during times of crisis^{[ ]}, the pandemic put unprecedented pressure on the price of goods. But as corporations have reported strong earnings over the past year, some economists have raised questions about greedflation such as Isabella Weber at the University of Massachusetts Amherst and Albert Edwards, the influential chief global strategist for the French lending giant Societe Generale^{[ ]}.

Here are three strategies you can take to offset the high cost of living.

1. Create a Budget

If you’ve never created a budget before, there’s never been a better time to make one and start using it. In the face of greedflation, establishing a spending plan can be a key step toward regaining control of your finances.

Creating and sticking to a budget helps you manage your resources more efficiently. By tracking your expenditures, you’ll gain a clearer understanding of where your money is going and identify areas where you can cut back.

One popular budgeting strategy today is known as the 50/30/20 budget. With a 50/30/20 budget, you allocate 50% of your monthly after-tax income toward needs, 30% toward wants and 20% toward saving and debt reduction. If you’d like help with setting up your first 50/30/20 budget, check out Forbes Advisor’s budget calculator.

2. Compare Prices

When average prices are on the rise, comparison shopping is more important than ever. In addition to checking multiple brands for everyday purchases like groceries, don’t forget to compare rates for your monthly or semi-annual bills like internet, cable and auto insurance. Improving your car insurance rate alone could save you hundreds of dollars per year.

For travel planning, consider using search engines like Google Travel or Expedia to view fares from multiple airlines or hotel chains at once. If you have flexible plans, check a variety of departure and return dates. You may find that you could save serious money by moving your travel days up or back by just a day or two.

3. Leverage Credit Card Rewards and Perks

A 2022 survey commissioned by Wells Fargo found that nearly half of rewards cardholders were relying on credit card rewards to help cover the inflated costs of everyday purchases.^{[ ]} In a January 2024 study commissioned by Forbes Advisor, respondents were asked to give their primary reason for using a credit card. “To earn rewards” was the most popular answer (35%).^{[ ]}

Cash back, in particular, can be a valuable tool to combat the high prices of goods and services. When asked to select the type of credit card rewards that appealed to them most, 72% of Forbes Advisor’s survey respondents chose “cash back or statement credits.”

Other rewards cards earn miles or points that can be redeemed to reduce the out-of-pocket costs of going on a vacation. Several of the best travel credit cards also offer money-saving perks like free hotel nights, waived baggage fees or statement credits toward travel-related expenses like the enrollment fees for trusted traveler programs.

Greedflation has become a concern for many consumers grappling with the impact of rising prices on their everyday expenses. The debate surrounding greedflation highlights the struggle between corporate profitability and consumer well-being. In high-cost environments, it’s essential for individuals to exercise financial discipline and explore innovative ways to save.