The Wall Street JournalThe Wall Street Journal

Why is inflation so sticky? It could be corporate profits

By Paul Hannon

02 May 2023 · 4 min read

Why does inflation remain so stubbornly high despite rising rates? One reason is that businesses have been "padding their profits" by raising prices, reports the WSJ.

Curated by informed

Inflation has proved more stubborn than central banks bargained for when prices started surging two years ago. Now some economists think they know why: Businesses are using a rare opportunity to boost their profit margins.

Figures released Tuesday by the European Union’s statistics agency showed consumer prices in the eurozone were 7.0% higher than a year earlier in April, a pickup from March and more than three times the European Central Bank’s target. However, the core rate of inflation—which excludes food and energy prices—edged down to 5.6% in April from a record high of 5.7% in March.

The news, curated.

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