Monopoly Power Blamed For Persistent High Inflation In The U.S.

Renowned economist Robert Reich argues that monopoly power is a key factor driving the continued high inflation rate in the United States, as reported in his Substack.

Despite indicators of dropping inflation, major companies like PepsiCo and Coca-Cola have implemented double-digit price increases, citing their market dominance as justification. I Photo: Rex Sorgatz Flickr

Reich highlights that corporate profits soared to unprecedented levels in the fourth quarter of the previous year, yet many Americans remain unconvinced of the Biden administration's economic success.

Despite indicators of dropping inflation, major companies like PepsiCo and Coca-Cola have implemented double-digit price increases, citing their market dominance as justification.

Reich points out that this trend extends beyond the beverage industry, particularly affecting groceries, where prices for beef, pork, and poultry products surged by at least 30% from 2020 to the end of 2023.

He attributes this to the near-monopoly control exerted by just four companies, controlling 80% of beef processing, nearly 70% of pork, and 60% of poultry processing.

Such dominance allows these companies to coordinate price hikes with ease, exacerbating inflationary pressures across the economy.

Highlighting the broader scope of the issue, Reich reveals that 75% of US industries now feature fewer companies controlling larger market shares compared to two decades ago, indicating a pervasive concentration of market power.

Reich advocates for vigorous enforcement of antitrust laws as a solution. He applauds the Biden administration's efforts to challenge monopolistic practices, such as the lawsuit aimed at blocking the merger of Kroger and Albertsons, two major grocery chains.

Additionally, legal actions against tech giants like Amazon and Apple for exploiting market dominance to inflate prices and stifle competition represent significant strides in combating monopolistic behavior.

Moreover, successful legal interventions, such as preventing the merger of JetBlue and Spirit Airlines, underscore the importance of curbing consolidation in industries to safeguard market competition and consumer interests.