Inflation affects every citizen and while there are many detailed descriptions about why this economic condition that raises prices exists, economists don’t really explain when Inflation is due to verifiable shortages and demand increases or is due to plain-old greed.

The practice of raising prices beyond the level needed to replace the increased costs needed to manufacture the old items is a fancy way to describe good-old price Gouging.

Price gouging happens when inflation is commonplace or there is a  deep shortage due to disasters, supply-chain breaks, and too much demand for a limited supply.  But there are also other reasons, including greed.

Price Gouging in Action

Here are a few examples from a big box hardware store in south Florida that illustrate this point.

Here are some professional-quality building tools (an impact wrench, titanium bits) that were in the process of having their prices literally raised overnight. The boxes were never moved and the contents of these items never changed.

These photos show the old prices and the new prices in pen that were changed due to inflation and price increases ranging from 20% to 10%.

The problems are that these tools were on the shelves of the big-box hardware store for months. Prior to that, they were made in China about an estimated nine to 12 months before.

This means the completed and assembled tools in these packages were produced about 16 months ago when inflation was at about 5% versus the current level of 10.3%.

This also means all the inflationary costs were literally built into the prices of these tools about one year earlier. So, why did these prices literally rise overnight?

Greed.

Greed is not a formal term used by academic economists, but price gouging is as old as the study of economics. So, while this example does not single out a specific manufacturer or line of products, its shows that not all inflation is equal. Much of it is due to unregulated capitalism.

Sometimes there are legitimate reasons for raising prices due to supply chain disruptions and commodity shortages.  In other cases, corporate executives see an opportunity and can charge higher prices simply because they can with a few keystrokes.

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