ELI5. How are large companies in the UK making record profits year on year, when inflation is high and cost of raw materials is high?

Question

Surely if the cost of materials is high and the cost to the consumer is high, profit should be stable, proportional and parallel with the cost to the consumer? But it seems like fuel, energy and supermarkets know something we don’t. Wtf is going on? If they are making such huge profits, and keeping costs high to maintain these, aren’t they just driving inflation and maintaining it at current levels?

In: Economics

Answer 1

The articles you hear are talking about profits in terms of their nominal value.

In other words, they’re making “record profits” but not adjusted for inflation. In periods of high inflation, you’ll get “record profits”.