As Canadians struggle to afford essential goods and services, the spoils of inflation are ending up largely in corporate profits, particularly in oil, gas and mining industries, a new analysis reveals.

The Canadian Centre for Policy Alternatives (CCPA) crunched the numbers to see how much more Canadians spent over the last two years due to inflation and pinpointed which industries benefited the most.

Between fall 2020 and fall 2022, 47 cents of every extra dollar spent on rent, food, transportation and more ended up as corporate profits in four industries, the report found.

For example, many consumers are justifiably angry that food prices are going up, and they blame the grocery stores because that's who’s selling them those goods, said David Macdonald, senior economist at the CCPA and author of the report Where are your inflation dollars going?

“But that doesn't really tell us who's benefiting from those higher prices,” he said, noting grocery stores were rolled into a larger retail category, so this analysis can’t single out their profits.

Supply chains are long and it's not just the grocery stores themselves, it's food manufacturers, it’s farmers, Macdonald told Canada’s National Observer. It's also the oil and gas industry that provides the crude to make diesel and gasoline to run tractors and fuel the trucks transporting these goods back and forth across the country, he said.

“Without this industry analysis, you just kind of blame the last person in the supply chain as opposed to getting a more in-depth understanding of who is ending up with all this money at the end of the day,” he said. To answer that question, Macdonald created a new dataset to calculate how much of each inflation dollar ended up as profit, worker compensation or other costs (like depreciation and interest) across Canada’s 15 economic sectors.

“Of every additional dollar that you're spending, on average, a quarter of it is just being declared as profits in oil and gas and mining,” said Macdonald.

Pie chart depicting data from the Canadian Centre for Policy Alternatives' 2023 report: Where are your inflation dollars going? Infographic by Natasha Bulowski / Canada’s National Observer

“By far, the largest beneficiary of inflation has been the oil and gas extraction and mining industries, which, in an era of climate change, is probably not what we want,” Macdonald added.

“By far, the largest beneficiary of inflation has been the oil and gas extraction and mining industries, which, in an era of climate change, is probably not what we want,” said @DavidMacCdn, senior economist with @ccpa

Due to higher prices alone, $72 billion more was sent to the corporate sector in the third quarter of 2022 compared to the third quarter of 2020, the report found.

Of that, $18 billion ended up in mining and oil and gas extraction, and basically all of it was profit. Only $656 million went towards increased compensation for workers, the report found.

Macdonald’s methodology isolated inflation dollars, thereby removing the impact of higher levels of production that can also increase wages and profits. Because of the way industries are categorized, he couldn’t parse out exactly how much of the profit due to inflation can be attributed to oil and gas extraction versus mining.

The second-largest beneficiary was the manufacturing sector — which includes the refining of petroleum into diesel and gasoline — netting nine cents on every inflationary dollar. Real estate, rentals and leasing came in a close third with seven cents, and finance and insurers accounted for six cents of every inflationary dollar.

“This particular analysis really shows that these companies have been on the winning side of inflation despite the disruption it's caused everyone else,” Macdonald told Canada’s National Observer.

One way to cycle these corporate profits back to Canadians is through a corporate surtax on all industries, much like the one in place for banks and life insurers’ groups. This one-time 15 per cent tax on income above $1 billion for the 2021 tax year for banks and insurers was introduced in Budget 2022. The report says companies profiting from inflation are the best candidates for such a tax because those profits aren’t due to increased output.

Natasha Bulowski / Local Journalism Initiative / Canada’s National Observer

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Grocery Giants Discussed Fixing More Than Bread Prices, Court Files Suggest

The Canadian bread price-fixing scandal first made headlines in 2017 when the Competition Bureau launched an investigation targeting retailers alleged to have conspired with Loblaw — including Walmart Canada, Sobeys, Metro and Giant Tiger stores — to raise bread prices across Canada in a co-ordinated manner and block sales that offered consumers lower prices.

“Between price increases, there was a constant flow of information between suppliers and retailers with a view to maintaining stability in the market. This was colloquially referred to as ‘category management,’”..


“The truth about price-fixing often remains hidden in the shadows,” said Pecman.

“Cartels typically involve secret deals between schemers who are careful to cover their tracks. Neatly written agreements between competitors rarely exist. Emails get deleted, and meetings to collude on price happen in obscure places.”

There's no way that grown-in-Ontario leeks needed to be sold at ~$4 each in October, and can now be sold (at a profit) for 2-3 for $3.99.
And somehow or other, *all* the supermarkets indulged in the same chicanery.
Meanwhile, the same grown-in-Ontario cauliflowers that were being sold at Sobeys for $8 were being sold at produce marts for $3. Those produce marts don't get the benefit of quantity purchasing, either.
Neither did the grown-in-Ontario brussels sprouts that were sold for well under $2/lb a cpi[;e of months ago cost so much more in storage for a couple months more, as to require a price more than double that.
But generally speaking, when store mark-ups are a flat amount based on their purchase price, their profits will expand inordinately, because that purchase price includes everyone's "inflation" surcharge ... so the end consumer gets to pay not only the extra costs (and excess profits) calculated by every single stop along the supply chain, but the extra profit the retailer will accrue, as well, based on the unfairly-gained profits accrued along the supply chain for the simple reason that they can get away with it.
What would be "fair" to the consumer would be a markup based on number of units sold, not the end result of all the market and supply chain manipulations along the way.

"Inflation surcharge," is the thing not mentioned because it's Adam Smith's beloved "invisible hand" of what seems to be almost sacrosanct "profit motive," i.e.the extra money that anyone heroic enough to go into business is rightly owed for being an all-important job creator/ risk taker. (Adam Smith was actually a progressive, but never mind that part.)
The love of competition, the gamesmanship, underlies business as well of course, propelled by the sanctioned dishonesty of advertising, suckering people in to sell them your wares, which leads to a certain amount of awe for the manifest and impressive success of BIG business generally, who have clearly WON the ongoing competition in the magical marketplace. Quality services and stellar products have certainly been part of it too, but with "end-stage capitalism" upon us, the bottom line naturally supercedes everything else. And then there's the "trickle-down" theory, clearly debunked but still in play.
Grocery store owners clearly have us all over a barrel and have managed to retain some integrity through all the changes over the last few decades (except for that scandal around fixing the price of bread a few years ago), and we have always wanted to think that they are there for us and have "low margins" relatively speaking....

PM Trudeau addressed this in the year-end interview with Rosie Barton. He correctly pointed out that it was futile to impose taxes on corporations who would then just impose them on the consumer. If he were to go the taxation route, the government would need to be creative in crafting the tax rules so that the oil companies just don't hike the price of gasoline and diesel.

It's not correct at all. The real economy has too much stickiness for them to be able to actually do that. People should think a moment: If corporations could REALLY just pass on tax increases to consumers, they'd have no reason to care about tax levels, and they wouldn't spend so much time, effort and money lobbying for tax reductions.

In fact, the story that there's no point taxing corporations because they'll just pass the expense on is just that--a PR story crafted by corporations and their paid for think-tank "experts" to persuade people that there's no point taxing them, SO THEY WON'T HAVE TO PAY TAXES.