Ed Manuel,Sophie Piton,Ivan Yotzov
The recent sustained high levels of inflation have increased focus on firm markups and profits. Some broad measures suggest increasing profits, but conflate market and non-market sector dynamics and omit important corporate costs. This column constructs an alternative measure of corporate profits to capture UK firm earnings in excess of all production costs. This measure has been declining since the start of 2022, consistent with evidence from historical energy shocks. This decline has not been uniform across firms, however: firms with higher market power have been better able to increase their margins, while others have experienced large declines.
Πηγή: Voxeu