Yes, companies can stay profitable without raising prices

Isaac Newton’s “Law of Universal Gravitation” states that what goes up must come down. Obviously, Sir Isaac hasn’t been to the supermarket lately.

Prices are rising well above the official inflation rate — and not always for the reasons companies claim. The real question is not why prices are rising. It’s if they need to go up.

Also read: 10 rules for companies to navigate the next chapter of global tariffs

Prices are rising quickly — and not just because of inflation

Although the official inflation rate in the US was around 2.4% to 2.7% at the beginning of 2026, companies across industries have implemented price increases in the high single-digit or even double-digit range. THE

Adobe’s Digital Price Index recorded the biggest monthly increase in online prices in twelve years in January, driven by electronics, household appliances and furniture.

Specific examples tell the story:

Video streaming subscriptions are up 30% year-on-year

Dell and HP confirmed PC price hikes of 15% to 20%, citing memory chip shortages

Beef prices rose by double digits; instant coffee shot up 24%

Eating out became 4.6% more expensive, with health, insurance and electricity also recording strong increases

More than half of small business leaders surveyed by Vistage Worldwide in December said they planned further price increases within three months.

“Greed Inflation” Is Real — and Hotly Debated

The main factors driving this trend include “tariff spillover.” Companies such as Levi Strauss and McCormick & Co. cited new import tariffs as the main reason for raising prices above general inflation.

Another factor is rising operating costs. Significant increases in health insurance premiums (up to 14%) and labor costs have led companies to adjust their own prices to maintain margins.

There are also corporate profit margins. A 2024 report from the Federal Trade Commission found that some food retailers have seized rising costs as an opportunity to further raise prices and expand profits, with revenues exceeding costs by more than 6% to 7% in recent years.

Whether corporations are responsible for “greed inflation” — defined as the use of inflation as a justification for raising prices and expanding profit margins beyond what is necessary to cover higher costs — is the subject of intense debate among economists, politicians and researchers, with evidence suggesting a relevant role in certain sectors, but disagreements regarding the overall impact on inflation.

It is undeniable that certain categories, such as food (especially dining out), electricity, natural gas and housing, have increased above the Consumer Price Index (CPI) average over the last twelve months.

Added to this is the phenomenon of “frequency of exposure”, from behavioral economics, according to which consumers are highly sensitive to price changes in frequently purchased items (such as bananas), but less attentive to adjustments in less frequent, high-value or financed purchases (such as cars).

Companies that are beating inflation without raising prices

Whatever the case, the bigger question is: can a company remain profitable today without raising prices? In many cases, the answer is yes — and the practice manual is already well known.

Operational efficiency: Food and consumer goods manufacturers are reducing ingredient, production and logistics costs through better sourcing and process improvements, absorbing inflation without passing it on to consumers.

Supply chain optimization: Strict inventory management and better demand forecasting free up margin without sacrificing quality.

Data-Driven Promotions: Retailers and brands are using data analytics and AI to adjust discounts and channel strategies rather than applying across-the-board price increases.

Product and packaging innovation: Lush has introduced more compact, solid shampoos and conditioners that reduce packaging costs and offer more uses per unit than liquid versions — increasing perceived value while supporting premium positioning and sustainability credentials.

Other prominent examples include Ikea, Aldi, Honda, Toyota, Mint Mobile, Lands’ End and Patagonia — companies that have built lasting customer loyalty by prioritizing value over margin extraction. As Benjamin Franklin said: “The bitterness of poor quality remains long after the sweetness of low price is forgotten.”

The real variable is leadership

While corporations generally seek to maximize profits, evidence suggests that in the post-pandemic environment of high inflation, some companies with great market power have adopted opportunistic pricing, contributing to higher and more persistent inflation than would otherwise have occurred.

This is part of human nature; and with the conflict in the Middle East, there will be companies that will see this unfortunate development as yet another reason to raise prices.

The examples above make it clear that corporations can, indeed, increase profitability without raising prices and, at the same time, maintain and even improve quality.

How companies respond depends not on US fiscal and monetary policy, but on corporate leadership. It is solely up to companies to do the right thing, both for their customers and their shareholders.