Margins, Mark-ups and Consumer Prices: Theory, Measurement and Implications | Bulletin
rba.gov.au
The RBA's deep dive into profit margins exposes why "greedflation" narratives collapse under scrutiny — and what markup theory actually tells us about who's really driving consumer prices.
Markup TheoryPrice-Cost MarginsMarket PowerInflation Dynamics
Theory Briefing
- Profit margins carry useful price-vs-cost signals, but the RBA warns that simple 'greedflation' stories badly misread the data.
- Markup theory shows margins can rise even without predatory pricing — shifts in demand, mix effects, and measurement quirks all distort the picture.
- The findings have direct policy implications: misdiagnosing inflation's source risks misdirecting monetary and competition responses.