By Jerry Haar
Corporations can enhance profitability without hiking prices and all the while maintain and even boost quality. How companies respond does not depend upon a nation’s fiscal and monetary policy but on corporate leadership. It’s up to firms alone to do the right thing, for their customers and shareholders.
Sir Isaac Newton’s “Universal Law of Gravitation” states that whatever goes up must come down. Obviously, Sir Isaac has not been to the grocery store lately.
In early 2026, evidence suggests that many companies are indeed raising prices above the current rate of inflation. While the official inflation rate sat at approximately 2.4% to 2.7% as of early 2026, multiple reports indicate that businesses across various sectors have implemented price hikes in the high single-digit or even double-digit percentage points.
Adobe Digital Price Index online prices posted largest monthly increase in a dozen years in January, driven by high prices for electronics computers, appliances, furniture and bedding. Specific examples include video streaming and rental subscriptions jumping 30% year-over-year, computers and hardware increases (Dell and HP have confirmed price increases of 15% to 20% for 2026, citing global memory chip shortages) while health care, insurance and electricity have surged as has dining out (4.6%). Beef prices have increased by double digits and instant coffee 24%.
More than half of small business leaders said they planned price increases in the next 3 months according to December survey of 600 entrepreneurs by Vistage Worldwide. The key factors driving this trend include “tariff pass-throughs”. Companies like Levi Strauss and McCormick & Co. have cited new import tariffs as a primary reason for increasing prices by amounts that exceed the general inflation rate. Another is rising operational costs. Significant jumps in health insurance premiums (up to 14%) and labor costs have pushed businesses to raise their own rates to maintain margins. Then there are corporate profit margins. `A 2024 FTC report found that some grocery retailers used rising costs as an opportunity to further hike prices and increase profits, with revenues outpacing costs by more than 6% to 7% in recent years.
Whether corporations are responsible for “greedflation”—defined as firms using the cover of inflation to hike prices and expand profit margins beyond what is necessary to cover higher costs—is a subject of intense debate among economists, politicians, and researchers, with evidence suggesting a significant role in certain sectors but dispute over its overall impact on inflation. macroeconomic policy that had led spending to explode, forcing up all prices in the medium-term.
Whatever the case, the larger question is: Can a company remain profitable today without raising prices? The answer, in many instances, is “yes.” Examples abound. Take consumer product companies. They can avoid raising prices and even improve quality. One way is through operations efficiency, with food and CPG manufacturers lowering ingredient, manufacturing and logistics costs through better sourcing and process improvements. Supply chain optimization is yet another way. Tight inventory management and better forecasting free up room to absorb inflation without lowering quality.
Additionally, retailers and brands are using analytics and AI to fine-tune promotions, discounts and channel strategies rather than across the board price hikes. Product and packaging innovation to increase perceived value is yet another way. Companies are innovating formats and packaging to deliver more uses per unit or a better experience at similar cost. For example, Lush, the British cosmetics retailer, introduced solid shampoos and conditioners that are more compact, reducing packaging and typically provide more washes per bar than many liquid equivalents, boosting value while supporting premium positioning. In addition to lower packaging and shipping costs, not to mention more uses per unit, Lush’s strong sustainability credentials resonate with the firm’s customer profile.
Other notable firms that focus on improving value and quality at lower prices include IKEA, Dell, Lands’End, Mint Mobile, Honda, Toyota, Aldi and Patagonia. These firms realize as Benjamin Franklin asserted: “The bitterness of poor quality remains long after the sweetness of low price is forgotten.”
While corporations are generally profit-maximizers, evidence suggests that in the post-pandemic, high-inflation environment, some corporations with high market power engaged in opportunistic pricing, contributing to higher and more persistent inflation than would have occurred otherwise.
The above examples clearly illustrate that corporations can, indeed, enhance profitability without hiking prices and all the while maintaining and even boosting quality. How companies respond does not depend upon U.S. fiscal and monetary policy but on corporate leadership. It’s up to corporations alone to do the right thing, for their customers and shareholders.
About the Author
Jerry Haar is a business professor at Florida International University and a fellow at both the Baratta Center for Global Business Education at Georgetown University and New York University’s Development Research Institute. He is also a member of the International Executive Resources Group.
