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Report on corporate price increases amid rising inflation in the US

While home budgets are under the impact of rising prices for fuel, food, rent and other necessities, oil companies and other large business sectors are enjoying huge profits by partially depriving consumers.

Gas prices in Downtown Los Angeles, California on Monday, March 7, 2022. (AP Photo / Damian Doverganes)

According to a new report by the liberal think tank Roosevelt Institute, data verification by 3,698 US-operating companies has found that both markups and profits have risen to their highest levels since the 1950s.

In 2021, the average markup reached 1.72, meaning that the typical price the company charged was 72 percent higher than their cost. That is an increase from the 1.56 markup throughout 2010. The biggest increase in markups since the 1950s last year was two and a half times the next big annual markup. The study found that oil and gas, real estate, quarrying and mining had the biggest markups. The study found that the financial sector has the largest single markup overall, indicating the huge profitability of Wall Street banks.

The report is a net profit margin, divided by net income from net sales. “We see a more consistent range of net profit margins, from an average of 5.5 percent in the 1960s to the 1980s, and an average of 6 percent in the 2010s. In 2021, it jumped to 9.5 percent — again the highest value on record. Profitability is steadily increasing across definitions.

Oil companies in particular enjoyed huge gains in the first quarter of 2022, fueled by war-induced price rises in Ukraine. Oil giant ExxonMobil alone posted a profit of $ 5.5 billion, doubling its results in the first quarter of 2021. Shell earned $ 9 billion in the first quarter, its best single-quarter result. BP reported $ 6.2 billion in the quarter, noting the loss to offload its holdings in the Russian-controlled oil company. It was BP’s best quarter in 10 years and Shell also reported a significant rise. Chevron has seen an increase and Conoco’s profit has increased fivefold since 2020. All told, the Big Five oil giants made $ 35 billion in the first quarter. The 25 top oil companies made $ 205 billion in profit in 2021.

According to the latest New York Times Profits in the article, S&P 500, are up 70 percent from 2020 to 2021 and 33 percent over 2019 before the epidemic. The same report estimated “$ 200 billion in additional operating profit last year because of the increase in this margin.”

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