Costco accused of “greedflation”: Wholesaler reports increase in earnings while hiking up prices

A new analysis found that Costco reported consistently high profits while raising store prices

By Joy Saha

Staff Writer

Published June 10, 2024 2:00PM (EDT)

Costco wholesale club store (John Greim/LightRocket via Getty Images)
Costco wholesale club store (John Greim/LightRocket via Getty Images)

Pandemic-related supply chain disruptions, Russia’s invasion of Ukraine and excess savings have all resulted in one thing: high inflation. Amid the spring of 2021, prices for certain goods — especially food — increased greatly, according to the Federal Reserve System. Those price hikes eventually became more widespread by the fall of 2021, and by 2022 inflation had risen to levels not seen in 40 years.   

Surely, such high inflation rates coupled with rising living costs came with consequences. Following COVID’s peak, “shrinkflation,” in which items shrink in size or quantity while their prices remain the same, grew rampant. Same with “fast-flation,” which has led to a decrease in consumer demand for fast food due to soaring menu prices.

Recently, there’s been much chatter about “greedflation.” Previously dismissed as a fringe theory, the concept of major corporations exploiting inflation in an effort to make huge profits has become a hot-topic amongst economists, policymakers and analysts alike. Recent studies have shown that company profits for a great number of corporations increased at much faster rates than inflation-related price markups. According to a joint study from think tanks IPPR and Common Wealth, profits for companies across the U.S., the U.K., Europe, Brazil, and South Africa rose by 30% between 2019 and 2022, significantly surpassing inflation. In the U.S., a third of major corporations were found guilty of profiteering.

Energy companies like Shell, Exxon Mobil, and Chevron were at the top of the leaderboard for highest profit surges, the study specified. On the food front, Kraft Heinz saw the highest surges.

Now, Costco Wholesale is the latest corporation being accused of rampant greedflation. A new analysis from Accountable.US, a nonpartisan watchdog group, revealed that Costco reported consistently high profits and net incomes year over year, all while the company raised store prices and considered increasing its membership fees.

In its third quarter earnings report for fiscal year 2024, Costco reported $1.68 billion in earnings, a 29% increase year over year (YoY). In the previous quarter, Costco reported an 18.8% increase in net income YoY, from $1.4 billion to more than $1.7 billion, “as it spent $8 billion on cash dividends and $322 million on stock buybacks during the first half of its fiscal year 2024,” Accountable.US said.

The big-box retailer added that net sales in Q3 2024 increased 9.1 percent, to $57.39 billion, from $52.60 billion last year.

Amid surges in profits, Costco warned consumers that they may have to pay a heftier fee in the future for the retailer’s annual membership. Costco hasn’t raised membership prices since 2017, and isn’t planning on doing so immediately. During a March earnings call, Costco’s former chief financial officer Richard Galanti said it’s a matter of “when, not if” the retailer raises membership prices. Costco CEO Ron Vachris further suggested a price increase would actually benefit both the company and consumers, during an earnings call on May 30. An increase would award Costco additional revenue that could allow the company to lower store prices and help customers save money over time, Vachris said.

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Costco also upped the prices on some of its key goods. Costco increased its prices on gas, which is often 30 to 50 cents cheaper than other gas stations, GOBankingRates found. Last month, Costco shoppers across the U.S. and Canada noted price hikes on Kirkland Signature Organic Extra Virgin Olive Oil. Eat This, Not That reported that in one Brooklyn store, the oil was available for $24.99, compared to $16.99 in March 2023. Costco’s price hike isn’t an exception however, considering that a widespread shortage of olive oil has caused retail prices to reach record highs. Back in September, olive oil production in Spain (which accounts for more than 40% of the world’s olive oil production) had already fallen by a half — from an estimated 1.3 million to 610,000 metric tons — due to a yearlong drought and a spring of extreme heat.

Shoppers over on Reddit also noted that Costco’s Chicken of the Sea, Chunk Light Premium Tuna went up by a dollar and Enfamil baby formula increased from $49 to $58 in the past few months. Additionally, price hikes were seen for ground beef, boneless chicken, frozen burgers and protein powder.

“Costco’s massive uptick in earnings answers the question of whether they really needed to raise prices despite easing inflation. In a word: no,” said Liz Zelnick, director of the economic security & corporate power program at Accountable.US, in the group’s analysis. “Over and over, we see big wholesalers and grocers unnecessarily squeeze American families, chasing record profits rather than stabilizing prices. It’s time these companies answer President Biden’s call to get their greed in check and bring prices down.”

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Salon Food reached out to Costco Wholesale Corporation for comment but has yet to hear back.

Costco joins a list of other top grocery store chains, including Kroger, Walmart and Target, that have reported profit surges and are spotlighted in Accountable.US’ analysis. Despite the greedflation claims, Costco reportedly lowered the prices of several food items in recent weeks. Kirkland Signature shrimp dropped in price by $1, new Costco CFO Gary Millerchip announced during the company’s May earnings call. A 1.5-pound bag of Kirkland Signature Organic Pine Nuts is now $24.99 (compared to $29.99 previously), while a four-pound bag of Kirkland Signature frozen fruit is now $10.99 (compared to the previous $14.99). San Pellegrino Sparkling Water, Kirkland Signature Fully Cooked Bacon, Kirkland Signature Vanilla Extract, Sun West Calrose Rice and Kirkland Signature Grass-Fed Beef Patties are also available for lower prices.

Greedflation has been called out by President Biden, who earlier this year, blamed corporate greed — and not himself — for inflation. In February, Biden said there are “still too many corporations in America ripping people off. Price gouging, junk fees, greedflation, shrinkflation.” The president is now being urged by progressives to follow in the footsteps of Sens. Bob Casey of Pennsylvania and Sherrod Brown of Ohio, who have made “greedflation” the primary focus of their campaigns. Casey, in particular, released four reports on the issue since November 2023 and is currently working on a price-gouging bill that would allow the federal government to investigate and stop corporate greedflation. 

“They’re ripping families off by jacking up prices way beyond their costs,” Casey said of big corporations in an interview with WTAJ-TV. “They’re exploding their prices all the while, they’re getting record corporate profits, and a huge tax cut. A corporate tax cut that they got in 2017. So, they’re laughing all the way to the bank.”

By Joy Saha

Joy Saha is a staff writer at Salon. She writes about food news and trends and their intersection with culture. She holds a BA in journalism from the University of Maryland, College Park.


Related Topics ------------------------------------------

Analysis Big-box Retailer Bob Casey Costco Food News Greedflation Joe Biden Kroger Target