Three Signs You Might Be Experiencing Greedflation From Your Suppliers

Article Highlights:

• The term greedflation, a combination of “greed” and “inflation,” refers to price increases that are no longer tied to actual cost pressures but instead used as a cover for margin expansion. 
• Tariffs are currently one of the most common justifications for price increases in electronics and semiconductor supply chains. For procurement teams, vigilance is key to mitigating these price hikes. When a supplier references tariffs as the reason for a cost increase, request detailed documentation. 
• Another indicator of greedflation is price contagion—where cost increases on a single product line ripple outward, raising prices on unrelated or unaffected goods.
• Another sign of greedflation is profit margin expansion during periods of cost normalization: when suppliers’ financial statements show profits rising faster than raw material or logistics costs, it signals that they are using inflation narratives to capture additional margin.

During the COVID-19 pandemic, global supply chains were thrown into chaos. Shortages of raw materials, factory closures, and surging demand caused prices across a range of industries to spike. At first, these increases felt like a necessary response to unprecedented challenges. But as global disruptions stabilized, many buyers noticed something troubling: prices weren’t coming back down.

This is where the concept of “greedflation” comes in. The term, a combination of “greed” and “inflation,” refers to price increases that are no longer tied to actual cost pressures but instead used as a cover for margin expansion. Originally associated with grocery chains and fuel companies, greedflation has quietly crept into electronics manufacturing, a sector already under strain from tariffs, geopolitical tensions, and fluctuating component availability.

A 2023 report from the Institute for Public Policy Research (IPPR) and the think tank Common Wealth found that corporate profits surged far beyond cost increases between 2019 and 2022, with large global corporations reporting profit growth of over 30%. Similarly, research by the University of Massachusetts uncovered evidence that companies leveraged their market power during a period of high inflation to raise prices aggressively—even when those hikes weren’t justified by raw material or logistics costs.

For procurement teams and manufacturing leaders, these findings highlight a crucial reality: not all cost increases reflect actual economic pressures. Some may simply be opportunistic. To protect your margins and maintain a healthy supplier ecosystem, keep your eye out for these three signs you may be experiencing greedflation from your suppliers.

1. Price Hikes Attributed to Tariffs—When No Tariffs Apply

Tariffs are currently one of the most common justifications for price increases in electronics and semiconductor supply chains. When the U.S. announced its first wave of tariffs on Chinese goods in 2018, many manufacturers saw a sharp uptick in costs for key components. The same trend re-emerged as tariffs were expanded in subsequent years.

But while tariffs are real and measurable, their complexity makes them easy to exploit and manipulate as a pricing rationale. Suppliers can attribute price increases to tariffs—even when the specific product in question isn’t subject to new duties, or when the overall tariff impact is far lower than claimed.

But while tariffs are real and measurable, their complexity makes them easy to exploit and manipulate as a pricing rationale.

For procurement teams, vigilance is key to mitigating these price hikes. When a supplier references tariffs as the reason for a cost increase, request detailed documentation. Breakdowns of Harmonized Tariff Schedule (HTS) codes, landed costs, and historical tariff exposure can quickly reveal whether the price increase is justified or inflated.

2. Rising Prices Spreading to Products Unaffected by Cost Pressures

Another indicator of greedflation is price contagion—where cost increases on a single product line ripple outward, raising prices on unrelated or unaffected goods.

This pattern isn’t unique to electronics. In a striking example, a 2018 academic paper following tariff hikes from Trump’s first presidency found that tariffs on imported washing machines led to price hikes on dryers, even though dryers weren’t subject to any new tariffs. Retailers simply took advantage of rising consumer expectations around appliance costs, marking up prices for complementary goods to boost profit margins.

In electronics manufacturing, this can take the form of suppliers increasing prices on passive components, PCB substrates, or housings, even if the original cost driver was tied solely to semiconductors or specific metals. If one product faces a genuine supply constraint, suppliers may choose to reprice entire product categories, assuming buyers won’t challenge the increases.

To counter this, organizations should:

• Benchmark pricing across product categories.
• Compare supplier pricing behavior to broader market indexes.
• Track component-specific cost trends to separate inflation from opportunistic pricing.

Greedflation thrives in opacity. By building a granular understanding of market conditions, procurement teams can hold suppliers accountable for unjustified markups.

3. Profit Margins Expanding Despite Stabilized Costs

The most definitive sign of greedflation is profit margin expansion during periods of cost normalization. When suppliers’ financial statements show profits rising faster than raw material or logistics costs, it signals that they are using inflation narratives to capture additional margin.

In a blog post for the Economic Policy Institute, Chief Economist Josh Bivens noted that “rising profits explained well over 40% of the rise in the price level between the end of 2019 and mid-2022.” Under normal conditions, though, profits typically account for only around 11–12% of price increases. Bivens further observes that although this profit-driven contribution to inflation has eased somewhat, margins remain elevated. As of mid-2024, corporate profit growth still accounts for roughly one-third of overall price increases, significantly above longer-term norms.

For electronics buyers, this dynamic can be particularly damaging. Many manufacturers operate on thin margins and rely on predictable pricing to meet delivery schedules. When suppliers use market uncertainty to pad margins, it exacerbates volatility in already fragile supply chains.

When suppliers use market uncertainty to pad margins, it exacerbates volatility in already fragile supply chains.

Analyzing supplier earnings reports, where available, or working with third-party supply chain intelligence providers can help uncover these trends. Procurement teams should look for red flags such as:

• Rising operating margins despite stable or falling raw material indexes.
• Sudden price increases coinciding with broader market disruptions, even when supplier costs remain flat.
• Patterns of consistent price hikes not aligned with commodity, freight, or labor market data.

Why Greedflation Thrives in Electronics

Electronics supply chains are uniquely vulnerable to the greedflation phenomenon. The complexity of sourcing thousands of components across multiple tiers makes it difficult for manufacturers to verify the validity of every cost increase. Additionally, the long lead times and limited availability of specialized components often force buyers to accept pricing changes without detailed scrutiny.

This lack of transparency allows suppliers with market power—whether due to their size, proprietary technology, or control over scarce components—to push through increases without significant pushback. Over time, this behavior can create a feedback loop where pricing becomes detached from true production costs.

Practical Steps to Address Greedflation

Identifying greedflation is only the first step. The real challenge lies in addressing it without damaging supplier relationships. Here are three strategies to consider:

Demand Transparency

Ask suppliers for detailed cost breakdowns, including raw material exposure, freight costs, and tariff implications. While not all suppliers will be willing to share this data, consistent requests set a precedent for accountability.

Leverage Data Analytics

Partner with third-party data providers to track component-level pricing trends, compare supplier pricing behavior, and evaluate margin trends at both company and sector levels.

Diversify Sourcing

Building redundancies, or multisourcing, into your supply chain can reduce single-source dependencies, making it easier to challenge unjustified price increases, or abandon those suppliers altogether. 

The Bottom Line

Greedflation may not always be easy to detect, but its impact on manufacturing profitability is consistently profound. By recognizing the warning signs—tariff-based excuses, price contagion across product lines, and margin growth outpacing costs—manufacturers can take a data-driven approach to negotiating with suppliers and safeguarding their bottom line.

While inflationary pressures are real, it’s important to remember that not every price increase reflects them. Companies that invest in visibility, supplier intelligence, and analytical rigor will be best positioned to identify and mitigate profit-driven pricing, ensuring resilience in an already complex supply chain landscape.

Build Visibility Into Your Supply Chain to Tackle Greedflation

Z2Data’s supply chain risk management platform gives organizations access to the data they need to identify pricing changes and historic trends, understand exactly how tariffs are—and aren’t—impacting their products, and find qualified alternative suppliers to diversify their sourcing. To learn more about tackling greedflation with Z2Data, sign up for a free trial.