Inflation or profiteering? Advocacy group says companies raising prices under cover of inflation

SAN FRANCISCO (KGO) -- Inflation dipped to 8.5% in the latest federal report released this week, but some economists say it would be lower if it wasn't for corporate profiteering.

One after another, corporations are reporting record profits while inflationary pressures send the prices the general public pays skywards. Companies say they need to raise their prices to keep up with their rising costs. But now some are questioning whether those prices are being jacked up beyond what's necessary.

Rakeen Mabud of the economic policy project, the Groundwork Collaborative, keeps a close ear on corporate earnings calls and an eye on quarterly reports.

She's seen what she considers a disturbing trend.

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"This is a trend that we've seen throughout the pandemic of big companies using their market power to jack up prices beyond what their input costs would justify," Mabud said.

Mabud acknowledges supply chain issues, the war in Ukraine and pent up consumer demand have all contributed to inflationary pressures.

But she points to comments made by executives toward concluding that companies are taking advantage of the inflationary climate to raise prices higher than justified.

The chief financial officer of 3M said during his earnings call that the "team did an amazing job" driving higher prices, which have "more than offset the amount of inflation."

3M has more than two dozen lines of products including adhesives and aftermarket auto parts.

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Toll Brothers is one of the largest homebuilders in the United States, with luxury homes currently being sold in Alameda and Contra Costa counties.

Its chief executive officer said, "We have more than exceeded cost increases through our pricing over the last 18 months."

He went on to say they "are still comfortable with our ability to drive that gross margin higher."

"We are seeing CEOs being really, really clear that they're using the cover of inflation to jack up prices on consumers," Mabud said.

It's no secret gas prices have put the brakes on both driving plans and spending habits.

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The San Ramon-based Chevron announced in its Quarter 1 earnings call that the last two quarters have been the best in the company's history.

Its CFO announced the oil company is "generating excess cash" and seeing real cost savings.

According to AAA, the price-per-gallon in California is down nearly a dollar from a month ago, but it's still nearly a dollar higher than a year ago.

"They're not coming down as fast as you might expect, given the rate of decline in crude prices. And that difference there is just straight-up corporate profiteering -- companies making bank off a crisis," Mabud said.

Chevron told 7 On Your Side: "There are no easy fixes or short-term answers to global supply and demand imbalances. Chevron is doing its part by lowering carbon emissions, paying down debt and rewarding our shareholders, including countless Americans who hold Chevron stock in their retirement and pension funds."

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3M and Toll Brothers did not get back to us with a comment.

The Groundwork Collaborative says its findings have been backed up by two other independent reports, from the Economic Policy Institute and the Roosevelt Institute.

"The economic policy institute showed that, you know, half of the increases in the prices were really due to corporate profits," Mabud said.

The Roosevelt Institute found that corporations had record high profits in 2021 with prices set at 72% above the costs of producing a product, versus 56% pre-pandemic.

Take a look at more stories and videos by Michael Finney and 7 On Your Side.

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