Another factor that contributed to price increases for U.S. consumers – record corporate profits and profit margins. A measure of U.S. corporate profit margins tracked by the Federal Reserve was recently at levels not seen since the early 1950s, indicating that the increased prices charged by businesses exceeded their increased costs for production and labor. After-tax profits as a share of gross value added for non-financial corporations, a measure of aggregate profit margins, exceeded 15% in both 2021 and 2022, the highest level since the early 1950s. In the fourth quarter of 2023, corporate profits were approximately double what they were in the fourth quarter of 2019. The chart below demonstrates how inflation has been a global problem. Note the trends in inflation are generally similar across countries. The mitigation of global factors that contributed to inflation are reflected by the significant decline in inflation that has generally occurred around the world since 2022. However, inflation in 2024 has remained above desired levels. In the United States, over half the inflation in March was due to energy and shelter (housing). Global Inflation Rates 2017 – March 2024 (Sources: U.S. Bureau of Labor Statistics, Eurostat, Canadian Consumer Price Index, Rateinflation.com) 2017 2018 2019 2020 2021 2022 2023 2024*
0.3 0.7 0.9 0.8 3.4 1.2
2.6 3.4 2.6 2.9 5.7 4.7
8.4 6.8 9.1 6.6 7.9 8.0
5.4 3.9 7.3 5.6 5.5 4.1
2.4 2.9 3.2 3.6 4.4 3.5
Euro Area
1.5 1.6 2.7 1.9 6.0 2.1
1.7 2.3 2.5 1.9 4.9 2.4
1.2 1.9 1.8 1.6 3.6 1.8
Canada
U.K.
Australia
Mexico
U.S.
*Inflation rate for 12 months ended March 2024
Food Inflation Perhaps no other price increases affected consumers as much as food inflation. You can’t avoid buying food - the increase in food prices can play a significant role in consumers feeling about how they are doing economically. In the United States, food prices rose significantly from 2019 to 2023; however, food inflation was significant around the world. The table below shows five-year food inflation over the period March 2019 through February 2024 for the United States, Canada, the Euro Area, and the United Kingdom. The food price index increase was 27.2% for the United States, compared to 25.7% for Canada, 28.8% for the Euro Area, and a whopping 35.6% for the United Kingdom. Once again although there are regional and climate differences, global factors affected the general trends in food prices similarly between countries.
Five Year Food Inflation March 2019 – February 2024 (Sources: Bureau of Labor Statistics (U.S.), Office for National Statistics (U.K.),
Eurostat (Euro Area),Statistics Canada (Canada), YCharts) Food Price Index - March 2019 Food Price Index - Feb. 2024
% Increase
United States
257.59 149.00 106.38 103.10
327.88 187.40 137.02 134.90
27.2 25.7 28.8 35.6 3.78
Canada
Euro Area
United Kingdom United Kingdom
FTSE 100
2.82
Central Wisconsin Report - Spring 2024
7
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