London Daily

Focus on the big picture.
Friday, Jul 10, 2026

'Greedflation' explored: Are businesses making inflation worse through excessive profits?

'Greedflation' explored: Are businesses making inflation worse through excessive profits?

Sky's economics & data editor examines whether there is a case to answer on the accusation that UK firms are ripping us off and making the cost of living crisis worse in the process.

It's an ugly word for an ugly phenomenon. 'Greedflation' is the new buzzword in economics.

The thesis is quite simple. While a certain chunk of the inflation we're currently living through can undoubtedly be put down to higher energy prices and a chunk put down to higher wages as employers pass those costs onto their workers, there's a sizeable chunk that comes back to something else: profits.

Some economists argue that businesses are using the cost of living crisis as an opportunity to generate excessive profits.

This isn't just an idle theory. Economists at the European Central Bank (ECB) actually have some statistical evidence to back it up.

You can only learn so much by breaking down the consumer price index, the traditional measure of rising prices (inflation, let's not forget, is simply the rate at which the prices of the average goods and services we spend most of our money on change each year).

That might tell you how much is down to food price inflation but it can't give you a sense of how much of that given increase in food prices is benefiting workers versus their employers.

But there is another way of skinning the numbers. You can look instead at another measure of prices, something called the gross domestic product deflator.

Looking at prices this way, via another dataset, allows you to work out how much of the pricing pressure we're currently seeing can be put down to profits and how much down to wages (or indeed other factors like taxes).

And the ECB chart is pretty stark:


The key thing to look at are the red slices of the bar. That's showing you how much of the rise in prices in the past few years can be attributed to profits.

And it's pretty clear that profits have been a considerable chunk of the recent increases in prices. Indeed, in the most recent couple of quarters of data, for late 2022, profits accounted for more of the rise in prices than wages (the green slices).

Now, some would argue that this isn't necessarily profiteering. It's simply businesses doing what they always do when there's lots of demand for goods and raising their prices.

Without that response, the market as we know it simply wouldn't function. Nonetheless, some say it underlines that a good chunk of the price squeeze is due to the greed of businesses.

So that's the eurozone. How about the UK?

Well in the past few days we at Sky News have done a similar exercise to the ECB, using our own GDP deflator data to create our own 'greedflation' chart. And here's what it shows:


A few obvious things leap out. The first is that enormous spike in prices and then the fall during COVID and its aftermath.

As far as I can tell this was in large part a function of the fact that wider measures of the economy were all over the shop.

It's quite hard to know how much to read into anything going on during this yo-yo as for all we know it could be a statistical aberration (perhaps worthy of some further study).

But now look at the red slices. While the slice is certainly pretty big in the very latest quarter for which we have data (the final quarter of 2022), even in that quarter profits were still slightly smaller as a component part of the GDP deflator than wages.

And look a little further back and actually the contribution of profits to prices was far, far smaller than in the eurozone.

In other words, if this is our best statistical measure of 'greedflation' - and it seems to be - then we have considerably less of it here in the UK than there is on the other side of the Channel.

Tempting as it is to blame businesses for what we're suffering through, there's not an enormous amount of evidence from these figures that they are the main culprit. Actually, taxes (in other words the government) contributed much more to inflation in 2021 and into 2022 than business profits.

Now, with Britain facing double-digit inflation, a miserable cost of living crisis and rising interest rates, the above might not be of much consolation. And it's quite possible the numbers may well shift - note that these figures are a little slow to be updated, so we don't know the picture as of the early part of this year.

Even so, it's a reminder that the data sometimes tells a subtly different story to the mainstream narrative.

Newsletter

Related Articles

0:00
0:00
Close
The AI Invoice Shock: Layoffs Didn't Save Managers Money — They Cost Them More
Concern: Sexually Transmitted Bacterium Among Men Develops Antibiotic Resistance
Following Massive Investor Demand: SK Hynix Raises 26.5 Billion Dollars on Nasdaq
Passenger Partially Pulled Out of Ryanair Jet After Cabin Window Fails Mid-Flight
After Four Years, and Under a Heavy Veil of Secrecy: King Charles Meets His Grandchildren, Harry and Meghan's Children
Cross-Party MPs Call for National Climate Emergency Broadcast
Bayeux Tapestry Arrives in the United Kingdom for Landmark Exhibition
United Kingdom Launches Modern Slavery Prevention Programme in Vietnam
Police Warn Against Misinformation Following Disorder in Glasgow
Pension Reform Takes Effect to Consolidate Workplace Savings Industry
Treasury and Bank of England Monitor Economy as Energy Price Pressures Ease
Government Orders Treasury Reform of Disciplinary Procedures Following Civil Servant's Death
Ofcom to Require Major Technology Platforms to Block Scam Advertisements
Labour Apologizes Over Gaza Position in Bid to Rebuild Support
High Court Rules UK-France Asylum Agreement Protection Cuts Were Unlawful
Metropolitan Police Open Murder Investigation Into Death of Former MP Ann Widdecombe
University College London Report Proposes Replacing Council Tax and Stamp Duty With National Property Tax
Treasury Places Amazon, Google, Microsoft and Oracle Under New UK Financial System Oversight Rules
Severe Heatwave Drives Dangerous Ground-Level Ozone Pollution Across Two Thirds of European Union
Westminster in Freefall as Farage's By-Election Gamble Triggers Broader Systemic Crises
Institutional Fractures and Political Volatility Reshape Britain's Domestic Landscape
Deadly Fire, Health Emergencies and Political Upheaval Shape a Volatile Global News Cycle
UK Energy Strategy Focuses on Storage and Offshore Wind to Support Renewable Transition
Regional Governments Gain Greater Role in Britain’s Infrastructure and Economic Strategy
Britain Strengthens Technology Sovereignty Through Tougher Artificial Intelligence Competition Rules
UK Government Expands Artificial Intelligence Use Across Public Services Despite Privacy Debate
UK Universities Warn of Financial Pressure After Sharp Fall in International Student Enrolment
Welsh Government Completes Rail Nationalisation With One Point Five Billion Pound Modernisation Plan
Northern Ireland Records Export Growth as Companies Benefit From Dual UK and EU Market Access
Greater Manchester Launches Two Billion Pound Plan to Convert Empty Commercial Sites Into Housing
National Grid Connects Europe’s Largest Battery Storage Facility in Yorkshire
UK Defence Ministry Plans Royal Navy Autonomous Fleet Deployment to Indo-Pacific
Scotland Approves Europe’s Largest Floating Offshore Wind Project Near Aberdeen
Competition and Markets Authority Blocks Forty Billion Pound Technology Deal Over AI Security Concerns
UK Launches Five Hundred Million Pound Artificial Intelligence Network for National Health Service Diagnostics
Bank of England Signals Possible Interest Rate Cuts After Inflation Falls Below Target
UK Government Unveils Major Wealth Tax Reform to Fund National Health Service Infrastructure Expansion
Flight Instructor Jumped to His Death — Student Landed the Plane: "You Know What You Need to Do"
The Physical and Electronic Barriers Disrupting Domestic Wireless Networks
France and Morocco Open World Cup Quarter-Finals as Collina Defends Refereeing
Prince Harry Suffers Major Court Defeat in Legal Battle Against Daily Mail Publisher
Bonnie Tyler, Welsh Singer Behind Total Eclipse of the Heart, Dies at 75
Barclays and PwC Report Examines Economic Opportunities from Financial Asset Tokenisation
Pound Sterling Strengthens as Investors Anticipate Further Bank of England Rate Increases
British Business Bank Invests Twenty-Seven Million Pounds in Kraken Technology Defence Expansion
UK Business Secretary Peter Kyle Backs State Investment Strategy Inspired by US Approach
UK Electricity System Issues Margin Notice as Heatwave Tightens Evening Supply Outlook
Labour Leadership Contest Opens as Andy Burnham Emerges as Expected Sole Candidate
Tech Pulse: The Future of AI and Screen Culture
Global News Briefing: Escalating Geopolitical Tensions and Corporate Shakeups
×