Some inflation is nothing more than deliberate price-gouging by businesses

 

I was cynically amused by the outrage displayed by a shopper at Whole Foods in Boston.

A Boston-based influencer has sparked outrage over inflation after claiming she paid $7 for a single apple at a Whole Foods.

. . .

“Genuinely what economy are we all f–king living in that it costs 7 dollars to buy an apple?” she asked. “I could have sworn that some other like apple that I bought was not 7 f–king dollars. It’s crazy, like 7 dollars for a latte? OK. This apple better be tasting so f–king good.”

There's more at the link.

I agree with her:  that price for a single apple is absolutely ridiculous - but so was her behavior in buying it.  If she'd put it down and walked away, she'd have saved money and the store might have learned a lesson in consumer economics.

Something like this is behind quite a lot of inflation.  Businesses aren't pricing their goods according to what they pay for them, plus a fair and reasonable profit.  Instead, they're pricing them as high as they think they can get for the product.  From a strictly capitalist perspective, of course, they're entitled to do so, because there's nothing forcing us to buy their products in the first place.  We can always look for lower prices somewhere else.  However, that becomes a lot more difficult when the availability of product is restricted (e.g. a breakdown in the supply chain, a natural disaster, etc.).  Under those conditions, products that are critical to life, health and safety may be priced out of the reach of those who most need them.  Is that just?  Is that fair?  "Pure" capitalism says it doesn't matter - that the market determines the price.  Simple human decency (not to mention the teaching of a large number of religious faiths, including Christianity, Judaism and Islam) argues otherwise.  There's no point in debating that here.  Opinions are likely as numerous (and as diverse) as our readership.

Another aspect of that problem is corporations that enter a market offering deliberately low prices, even below cost, in order to gain dominance there.  By doing so, they drive out of business other companies that can't afford to price-match them.  As soon as their competition is gone, they increase their prices to normal levels - sometimes far above normal levels.  Since consumers no longer have anywhere else (local) to go for what they need, they have little or no choice but to pay the now-inflated prices.  I've seen that at work, too.  A few years ago, back in Tennessee, a garbage removal company tried to enter our local market by offering rock-bottom rates.  Our existing service, a small family-owned business, put out flyers to all its customers, pointing out what was happening and saying that if the new entrant succeeded, they'd have to close their doors, because they didn't have the financial resources to fight back.  When a number of us checked, we found that the new entrant had used those tactics in a number of nearby municipalities, and then drastically raised its prices once customers were "locked in" to its services due to the absence of competitors.  Most of us stayed with our existing supplier, and the new entrant, frustrated, took its efforts elsewhere.

In so many words, a lot of the inflation we experience from day to day is actually caused by manufacturers and vendors setting the highest prices they think they can obtain.  They'll cite scarcity, supply chain issues, weather and anything else you can think of - but they won't reduce their prices unless and until market factors force that upon them.  Fundamentally, it's greed at work . . . and greed is one of the Seven Deadly Sins.  Unfortunately, many businessmen appear to ignore such factors.

One major exception to the rule is Waffle House, and they deserve a round of applause.  I'm sure most of my readers have heard of the "Waffle House Index", a widely referenced measurement of how severely an area has been affected by a disaster.  I've seen Waffle House at work through several hurricanes in the South, and one thing is very noticeable;  they never gouge their customers on price.  They get their restaurants back up and running as fast as humanly possible, and they maintain their pre-disaster prices no matter how much extra it costs them to bring in supplies over disrupted and sometimes hazardous routes.  Kudos to them for offering their services to survivors and rescue workers who need them very badly.  There are other stores that do likewise, but that's often at the discretion of local store managers.  Waffle House is the only chain I know of that does so as a matter of policy.  (If any readers know of other chains that do business that way, please let us know about them in Comments.)

Peter