Corporate greed is not the main driver of US inflation, according to a new study released by the Federal Reserve Bank of San Francisco on Monday.

According to Reuters, the research shows that while markups for motor vehicles and petroleum products surged during the 2021-2022 inflation spike, overall markups across US goods and services remained relatively stable during the post-pandemic recovery.

Corporate Greed Is Not the Main Driver of US Inflation

The study, which examined corporate profits as a key indicator of pricing power, found that although nonfinancial corporate profits grew early in the recovery, the increase was not unusually high compared to previous recoveries. 

Much of this profit growth was attributed to lower business taxes, higher government subsidies, and reduced net interest payments due to monetary policy accommodation.

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Did Overall Markups Rise?

Instead of using profits, the study measured markups directly by analyzing industry-level data on revenue spent on production inputs. The findings showed that overall markups did not rise significantly, suggesting that corporate pricing power was not a major factor in increasing inflation. 

"As such, rising markups have not been a main driver of the recent surge and subsequent decline in inflation during the current recovery," the Fed's report concluded. 

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