Aidan Regan: Corporate profiteering is at the root of the inflation crisis, not wage demands

Increasing interest rates won’t reduce prices as they are not driven by wage rises, but by multinational behemoths squeezing excess profit from a captive market

Isabel Schnabel, executive board member of the ECB: last week she presented new data showing that a key driver of price increases in the euro area are higher profits. Picture: Getty

The standard economic textbook definition of what drives inflation is too much money chasing too few goods. What this definition ignores, however, is the distributional politics of inflation.

Prices can be driven upwards by workers demanding pay increases that businesses pass on to consumers as increased prices, or they can be driven upwards by corporates increasing prices beyond their input costs to generate more profit. New data suggests that it is the latter that explains ...