The Importance of Corporate Profits in Inflation

While import prices account for much of Europe’s inflation, its outlook largely depends on how companies absorb wage gains as higher prices erode workers’ purchasing power. IMF economist Frederik Toscani studies inflation and monetary policy in the Euro Area and is coauthor of a new paper that breaks inflation down into labor costs, import costs, taxes, and profits. In this podcast, Toscani says corporate profits account for 45 percent of price rises since the start of 2022. 

Transcript: https://bit.ly/454o3Tk