Total markups were stable over 2018-2023 despite inflation

See Markups and Cost Pass-through Along the Supply Chain by Santiago Alvarez, Alberto Cavallo, Alexander MacKay, and Paolo Mengano.

"Abstract

We study markups and pricing strategies along the supply chain. Our unique dataset combines detailed price and cost information from a large global manufacturer with matched retail prices collected online for the period July 2018 through June 2023. We show that total markups—reflecting the difference between retail prices and production costs—are stable over time, despite the inflationary period at the end of the sample. Along the supply chain, manufacturer and retail markups are negatively correlated. For the most part, we find similar patterns across countries, though there is substantial heterogeneity in the split of markups between the manufacturer and retailers. Our analysis also reveals divergent pricing behaviors in response to cost shocks. The manufacturer adjusts prices more quickly than retailers and appears to more fully incorporate idiosyncratic cost shocks to specific products. Both types of firms respond more quickly to expected costs than to unexpected costs."

More from Alberto Cavallo via Twitter. 

"Key Finding 1: Total markups faced by consumers (retail prices relative to production costs) were stable during the recent inflation surge. Contrary to claims of "greedflation," we do not see any discrete change in total markups, suggesting that the increase in retail prices for these goods mostly reflects increases in manufacturing costs."

"Markups in other countries have similar patterns to those in the US. The distributions of total markups are strikingly similar across countries, although there is heterogeneity in how they are split along the supply chain. In the time series (not pictured), Mexico shows the greatest volatility in markups."