Has corporate greed driven inflation in the European Union? An analysis of the food and beverage industry

The EU has recently experienced high inflation rates, particularly in food prices. This observation led to claims in the news and by retailers that large food and beverage manufacturers take advantage of high inflation, and increase prices more than necessary (“greedflation”) to compensate for increases in their raw material prices. To test whether this claim is true, we estimate a production function to determine markups of output price over marginal costs for a sample of 88,717 European food and beverage manufactures covering the years 2013–2022. Our results do not support the greedflation hypothesis as markups have decreased over the considered period. In addition, there is a negative correlation between raw material prices and markups which is stronger for large firms, suggesting that these firms cannot be generally accused of taking advantage of high inflation. Our results imply that claimed “greedflation” does not justify additional pro-competitive policies in the food and beverage manufacturing sector.