Manufacturers take advantage of inflation
Pop calls for excess profit tax for food companies
01/15/2023 5:34 p.m
Not only oil and gas companies are making record profits in the current crisis. Many industries are taking advantage of high inflation to raise prices far more than their costs are rising. Germany’s top consumer advocate therefore wants to expand the excess profit tax planned by the federal government.
The chairwoman of the Federal Association of Consumer Protection Centers (VZBZ), Ramona Pop, has brought an excess profit tax for food companies into play. The partial siphoning off of the energy companies’ excess profits caused by the crisis is “a good model that could also be transferred to other sectors of the economy,” Pop told the “Bild” newspaper. “Healthy nutrition shouldn’t be a question of money.”
“We all know products where the pack size has been reduced and the price increased,” Pop said. “Whether and to what extent food companies and trade enrich themselves from the crisis will ultimately be shown by their profits, whether there are excess profits there too,” added the top consumer advocate.
The fact that the prices of many products are rising far more than would be necessary to cover rising production costs is by no means just a question of consumer perception. According to study According to the Institute for Economic Research (IFO), many companies take advantage of inflation to increase their profits. In agriculture and forestry in particular, as well as in the construction industry and in the retail, hospitality and transport sectors, many companies have increased their prices significantly more than would have been expected based on the increased costs for upstream services alone. Accordingly, companies from many sectors have reported record profits in recent months.
Pop: Suspicious price increase at energy suppliers
With an excess profit tax, the federal government has so far wanted to take some of the record profits from energy companies, which they have generated as a result of the high prices due to the Russian invasion of Ukraine. Pop also sees signs of abusive behavior when it comes to energy supplier price increases. “The wave of price hikes as of January 1st was pretty massive,” she said. A striking number of energy suppliers have increased their tariffs so much “that they are above the price brakes”.
She expects the Cartel Office to take strict action “against black sheep on the energy market and abusive price increases”. The consumer advice centers initiated a total of 45 warning procedures against energy suppliers last year, which is 23 more than in the previous year. The proceedings already led to 17 lawsuits in 2022.