Profits aren’t the cause of inflation, but now it’s the workers’ turn to catch up

Correlation does not equal causation. A recovery of the labor share of GDP will require contract renewals and a squeeze on profits, while competition will play a key role in balancing the effects

Readers will excuse us for some technical terms, but it serves to make people understand a very current phenomenon: is price inflation due to the increase in corporate profits? The short answer is no, if anything it’s the opposite: inflation has caused an increase in profits. The years after the pandemic were characterized by growth rates that Italy was absolutely not used to. 2021 saw nominal GDP increase by 7.63 percent against a collapse of 7.55 percent in the previous year, in 2022 there was an increase in nominal GDP of 6.80 percent.