UMass Amherst Economist Isabella Weber Briefs Federal Trade Commission on Inflation Research

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Isabella Weber, associate professor of economics, recently briefed officials from the Federal Trade Commission, including Chair Lina M. Khan, on inflation research that has helped to change the conversation about price spikes following the COVID-19 outbreak and Russia’s invasion of Ukraine. Weber and doctoral student Evan Wasner pioneered the research on corporate power in systemically important sectors and what that means in times of overlapping emergencies.

The concept, which Weber and Wasner call “sellers’ inflation,” has tapped into consumer frustration that corporations have used frequent headlines about soaring inflation as justification to hike prices, not only to cover increased costs for raw materials, but also to boost profits. 

“One of the big lessons with what we have been through the last few years is that major emergencies, major shocks, major disasters can be wonderful opportunities for increases in profits and this is not because firms suddenly got greedier,” Weber recently told the Wall Street Journal.

Corporations do not have to collude with competitors to raise prices because cost shocks caused by major emergencies give them the cover they need, she explains. If all firms in a given sector hike prices, market share is maintained and there is no incentive to drop prices.

Government officials including President Joe Biden himself have stepped up criticism of corporate price increases. He has warned companies against price gouging, and took to social media on Super Bowl Sunday to call out the shrinking contents of snack food packages.

There are signs, too, that consumers have had enough, as many shoppers are sending a message to producers by opting for lower-cost generic brands and some supermarkets in Europe are revolting by refusing to sell certain name-brand products due to price increases.