Why Is Everything Still So Expensive? The Inflation Story Nobody Is Telling

The Confusion About "Inflation Coming Down"

When officials say inflation has come down to 2 to 3 percent, they mean the rate of increase in prices has slowed — not that prices have fallen. A grocery cart that cost $150 in 2020 and costs $215 today does not get cheaper because the rate of increase slowed to 2.5%. That $215 is the new reality.

This distinction is crucial, and the failure to communicate it clearly has created enormous public frustration. People feel poor because they are relatively poorer — their wages have not kept pace with the cumulative price increases of 2021 through 2024.

What Drove Inflation — The Part They Don't Emphasize

The conventional explanation for post-pandemic inflation focuses on supply chain disruptions and Federal Reserve stimulus. Both are real contributing factors. But a substantial body of research points to a third factor that receives much less attention: corporate profit expansion.

A 2023 study by the Groundwork Collaborative found that corporate profits accounted for 53% of inflation in the US between July 2020 and June 2022. The Federal Reserve Bank of Kansas City found that companies with market power — the ability to raise prices without losing customers — expanded their profit margins significantly during the inflationary period rather than merely passing through cost increases.

Translation: many companies used the cover of supply chain inflation to raise prices more than their costs increased, boosting profits. This is sometimes called "greedflation" or "seller's inflation."

Why Tariffs Make This Worse

The Trump tariff regime is inflationary. Tariffs raise the cost of imported goods, which businesses largely pass on to consumers. In an environment where companies have demonstrated willingness to maintain elevated prices, tariff-driven cost increases become another justification for sustained high prices even after the tariff-specific cost is absorbed.

Who Gets Hurt Most

Inflation is most destructive to households with lower incomes, for a simple reason: they spend a higher share of their income on necessities — food, housing, energy, healthcare. The wealthiest households can absorb higher prices more easily because necessities represent a smaller share of their spending, and because their assets (stocks, real estate) tend to appreciate in inflationary environments.

This means the inflation of 2021-2024 was functionally a regressive transfer — from lower-income households to corporations and asset-holders.

Why There Is No Political Solution on the Table

Addressing greedflation would require antitrust enforcement against companies that have accumulated the market power to raise prices above cost-pass-through levels. The Trump administration has dramatically reduced antitrust enforcement, and the corporate donors who fund both parties have no interest in policies that constrain pricing power.

A robust Federal Trade Commission was one of the few tools available. Under the Trump administration, it has been redirected and weakened.

FAQ

Will prices ever go back to 2020 levels? Almost certainly not in aggregate. Price deflation of that magnitude would require either a severe recession or extraordinary policy interventions. The realistic goal is slowing the rate of future increases, not reversing past ones.

What is greedflation? Greedflation refers to the phenomenon of companies raising prices beyond what their cost increases justify, using inflationary conditions as cover to expand profit margins. It is documented in corporate earnings calls where executives explicitly acknowledge pricing power.

Does raising interest rates stop greedflation? Not directly. Higher interest rates slow demand, which can eventually force price competition. But they do not directly address the market concentration that enables sustained above-cost pricing.