WE HAVE BEEN hearing more and more talk of price gouging – or ‘greedflation’ – as a driver of rising prices since the Covid-19 pandemic. What does the latest data say?
Who are the winners? If we zoom out and take a look at the economy as a whole – using the CSO’s quarterly national accounts up to Q1 2023, published last Friday – we can see the role that profiteering played over the course of 2022, as well as some early signs of improvement in the first three months of 2023.
What can policymakers do to help? While central bankers are good at identifying the causes of inflation, they only have a limited number of tools to tackle it. Chief among these is the interest rate. But, this is more sledgehammer than scalpel. By increasing the cost of money, central banks reduce demand in the economy. Of course, this will lead to falling profit margins as consumers become unwilling or unable to pay higher prices for goods and services.
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