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Comment by ceejayoz | Hacker News Reader

The article cites lots of specific numbers that are well in excess of the 10% inflation we've seen. It also cites increasing margins.

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If your margins are 4% and they increase by 16% that’s increasing prices by 0.64%.

These are competitive industries with sub 5% profit margins being quite common. The simple reality is when companies hedge uncertainty they raise prices a little further than they expect their costs to rise. This is counterproductive when people buy less of their products, but staple food is a rather inelastic market.

They're not all that low. Tyson's cited in the article:

https://www.reuters.com/business/retail-consumer/tyson-foods...

> The average price for Tyson's beef surged 31.7% in the quarter ended on Jan. 1, while the unit's operating margins jumped to 19.1% from 13.2% a year ago. Average prices for all of Tyson's products climbed by 19.6%.

I said common not constant, one unit in one company did that well very briefly but overall that’s not abnormal. Some divisions have better quarters than others, and which is on top changes over time.

Tyson’s net quarterly profits peaked at 7.9% 3/2022, but it was also 7.4% in 2018. https://www.macrotrends.net/stocks/charts/TSN/tyson-foods/pr...

And if you look at their most recent numbers, net profits were 4.5% all of which is very favorable compared to 1.5% in 2012. Overall the tendency is at or below 5%.

You can increase your margins by double digits and still account for a small fraction of the overall increase. The determining factor is net profit of the grocery industry which is usually 3-5%. If you eliminated that entirely it still wouldn't put a dent in food inflation.

10% inflation is average, many things will inflate a lot more, but people don't post about stuff that was inflated less.

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