Corporate profits not indicating changes in firms’ pricing strategies

Abstract

The post-pandemic growth in corporate profits seen since the COVID-19 pandemic in countries other than Finland has been erroneously interpreted – also in Finland – as a signal of inflationary pressures generated by companies’ pricing strategies. This article seeks to provide an overall picture of the evolution of corporate profits and their relationship with changes in costs in Finland by examining various indicators capturing the macro economy. None of the indicators is pointing to an unusual growth in corporate profits in recent years. Therefore, it does not appear that firms have changed their pricing strategies in such a way that their profits would be driving up inflation.