Profits are not the cause of inflation. The Bank of Italy denies the ECB

For the Eurotower, the increase in prices is caused by the increase in business margins, but Bank of Italy says this is not the case: “In Germany and Italy, the increase in the profit share is associated with a stationary or negative dynamics of the mark-ups ”

Just now that it was consolidating, the debate on the causes and drivers of inflation in the Eurozone is being reopened. It is not the large corporate profits that are driving the price increase, or rather, there is no evidence that this is the case. To put forward the hypothesis, presenting it as supported by the data, was the European Central Bank. First it was Italian Fabio Panettain a March speech in Frankfurt, to say that businesses were raising prices on top of rising energy costs: “There could be an increase in inflation due to increased profits.” Then also Isabel Schnabela German member of the board, reiterated that “the high inflationary pressure may be due to the greater market power of firms”.