Fabio Panettaa member of the Executive Board of the European Central Bank (ECB), suggested that high corporate profits could generate a greater effect on inflation than anticipated, even beyond what is recognized.
In an interview with the New York Times, the official said there’s a lot of discussion around raising wages, but probably not enough attention is being given to “the other component of income, which is profit.” .
Panetta insisted that in some sectors “the costs of inputs are falling, but the prices of retail products are increasing, as are profits.”
The reflection of the official has meant a hard call for attention in days that the Euro zone is torn between one of the highest inflation rates in its history, with an energy crisis that has not yet been resolved, despite a greater supply from other parts of the balloon.
“So this is enough to be concerned, as a central banker, that there could be an increase in inflation due to the increase in profits,” he remitted in a report collected by the Bloomberg agency.
In addition, the ECB banker mentioned that these companies could seek to raise prices based on higher input costs at the moment or in anticipation of future volatility, or because they enjoy market power “that allows them to increase prices without suffering a loss of demand”.
Source: Larepublica
Alia is a professional author and journalist, working at 247 news agency. She writes on various topics from economy news to general interest pieces, providing readers with relevant and informative content. With years of experience, she brings a unique perspective and in-depth analysis to her work.
