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Transcript/ScriptUSAGM SHARE
((PLAYBOOK SLUG: Global Inflation Corporate Profits TV
HEADLINE: Are Corporate Profits Driving Global Inflation?
TEASER: Experts: Still a Long Way to Go to Bring Down Inflation
PUBLISHED AT: 05/08/2023 AT 12:30PM
BYLINE: Veronica Balderas Iglesias
CONTRIBUTOR:
DATELINE: Washington
VIDEOGRAPHER/VIDEO EDITOR: Veronica Balderas Iglesias
SCRIPT EDITORS: Newhouse, Bowman
VIDEO SOURCE (S): VOA, Agencies, see script for others
PLATFORMS (mark with X): WEB __ TV _X_ RADIO __
TRT: 2:58
VID APPROVED BY: MAS
TYPE: TV/R
EDITOR NOTES: Radio Tracks for Reversioning Included
TV EDS:))
((TV INTRO))
[[As prices for food and goods remain high in many countries, some economists say the persistent inflation is partly due to corporate profit-seeking. VOA’s Veronica Balderas Iglesias has the details.]]
((NARRATOR))
At the International Monetary Fund in Washington, researcher Daniel Leigh says there is cautious optimism about global inflation levels somewhat easing this year.
((Daniel Leigh, International Monetary Fund Researcher))
“But this is going to be a long fight. We don’t think most countries will get to their inflation target until 2025.”
((NARRATOR))
Different factors have contributed to advanced and developing economies exceeding their inflation targets.
((Daniel Leigh, International Monetary Fund Researcher))
“One was the boost to energy prices and food prices partly from the war in Ukraine. And on top of that a lot of countries are dealing with labor market shortages, not enough workers, is driving up wages.”
In capitalist economies, when demand goes up, prices also rise. But some analysts see an unusual form of inflation even as, in their assessment, demand holds fairly stable.
((Mandatory cg: Skype))
((Paul Donovan, Economist at UBS Global Wealth Management))
“Generally, companies that are quite close to consumers, so at the end of the supply chain, if you like, have been able to persuade their consumers to accept not just the cost increases, but the cost increases and a little bit more. And that little bit more is of course an increase in profit margin.”
[[RADIO INTRO: Paul Donovan, Chief Economist for UBS Global Wealth Management via Skype]]
((NARRATOR))
It might not be a sustainable approach, Donovan noted.
((Mandatory cg: Skype))
((Paul Donovan, Economist at UBS Global Wealth Management))
“If consumers start saying actually, that’s not a fair price increase, I’m not going to pay for that, then what you see is companies starting to worry that if they raise their profit margins too far, their brand value is going to be damaged.”
The National Retail Federation represents a full spectrum of companies. Their lead researcher affirms that consumer demand has increased dramatically and describes the “profit-led inflation” arguments as quote “very simplistic.”
[[RADIO INTRO: Mark Mathews is the Federation’s Vice President of Research Development]]
((Mark Mathews, National Retail Federation))
“I think every single day many of our members think about lowering prices. When the prices of goods are rising all over the place and inventories are low, then you know, retailers have to be able to pass some of those costs along to consumers.”
((NARRATOR))
What some may see as price gouging, others may view as businesses charging what the market will bear. Some may decry “excess profits” while others note that maximizing profit is the norm in a free market system.
Economists say profit can also rise though good management practices.
[[RADIO INTRO: Jonathan Fortun is an Economist with the Institute of International Finance]]
((Mandatory cg: Skype))
((Jonathan Fortun, Institute of International Finance))
“If you have better clients or if you have a better human capital inside your company, definitely you are going to have the potential or actually having larger profit margins.”
((NARRATOR))
Cooling consumer demand can force companies to abandon price hikes and rein in inflation – a key goal of the U.S. central bank, which recently boosted interest rates for the tenth time in just over a year.
((Veronica Balderas Iglesias, VOA News, Washington))
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