Greedflation! McDonald’s and PepsiCo accused of pushing up prices unnecessarily

Experts have accused food giants McDonald’s and PepsiCo of being “greedy” as they continue to raise prices – despite falling inflation.

PepsiCo, which owns major store brands such as Gatorade, Doritos, Tropicana and Lay’s chips, reported in late April that it had increased the price of all its products by an inflation-slowing average of 16 percent in the first three months of this year, the company said. New York Times. This is well above the inflation rate of 4.9 percent.

Meanwhile, McDonald’s revealed last month that higher prices had boosted first-quarter sales by four percent to $5.9 billion, compared to this time last year. A Big Mac now costs a whopping $5.31, according to data from CashNetUSA, compared to $4.33 in 2012.

It comes just months after business analysts accused PepsiCo, among other retail giants, of cashing in on headlines about inflation and global crises to raise their prices and see how much consumers are willing to pay.

PepsiCo’s chief financial officer Hugh Johnston said in February that the company had raised its prices enough to cover further cost pressures in 2023.

McDonald’s said in April that higher prices had boosted profits at the fast food giant

“I don’t think our margins will deteriorate,” Johnston said in a recent interview with Bloomberg TV.

“What we’ve said for this year is that we’re going to be at least level with 2022, and we can actually increase margins as the year progresses,” he said.

Transport and food costs have fallen in recent months due to sharp price increases following the pandemic and the Russian invasion of Ukraine.

According to the New York Timesthe Producer Price Index, which measures the prices companies pay for goods and services before they are sold to consumers, peaked at 11.7 percent last spring. That percentage dropped to 2.3 percent for the 12 months through April.

As a result, companies have fewer excuses to force higher prices on customers. Inflation, however, remains stubbornly above the Federal Reserve’s target of 2 percent — at 4.9 percent.

“Inflation will remain much higher than necessary because companies are greedy,” said Albert Edwards, global strategist at Société Générale.

“Companies don’t just maintain their margins, they don’t just pass on cost increases, they use it as a cover to increase their margins,” he added.

However, David Beckworth, a senior research fellow at George Mason University and a former economist for the Treasury Department, said he was skeptical that the rapid pace of price increases was “profitable.”

He said prices could not rise if people were unable or unwilling to spend more.

McDonald’s reported net income of $1.8 billion for the first quarter of this year, up 63 percent from the same period last year of $1.1 billion.

The company’s same-store sales increased 12.6 percent compared to the same period last year.

Albert Edwards, global strategist at Société Générale, warned that companies are ‘greedy’ and inflation will remain high

PepsiCo owns brands such as Tropicana, Doritos, Lay’s Potato Chips and Mountain Dew

PepsiCo’s chief financial officer Hugh Johnston (pictured) said in February that the company had raised its prices enough to cover further cost pressures in 2023

The number of customers visiting restaurants across the country also increased – and the company insisted the strong results were also a result of continued demand and cost increases.

About 4.2 percent of that growth came from increased traffic, while 8.4 percent from higher menu prices.

It comes as many other major chains are suffering from a so-called “retail apocalypse” sweeping the country.

Big-name stores like Walmart, Sears and Walgreens have been forced to close stores due to rising costs and crime, while 50-year-old discount house chain Bath & Beyond filed for bankruptcy in February and is in the process of closing all of its outlets.