Companies are passing higher costs to shoppers at the fastest pace since the 1950s, study finds

Today's sky-high inflation is a result of several factors, including Russia's invasion of Ukraine. The Roosevelt Institute found that the buck stops at US companies and that firms are charging Americans the most they have ever charged.

Inflation is closely tied to companies raising their prices, starting with an increase in the costs that go into their operations. Businesses that are affected raise consumer prices to make up for higher input costs. There are wide gaps between prices and costs in the economy.

The Roosevelt Institute's Mike Konczal and Niko Lusiani said in a June brief that the profits of US operating firms increased last year to the highest levels since the 1950s. The average price companies offered to their customers was much higher than the cost of the company. Through the 2010s, that's up from an average of 1.56 per year.

The period for which the duo ran their analysis was the year in which the largest annual increase in markups was claimed. The increase was 2.5 times larger than the previous year's increase.

Inflation has not been seen in four decades because of higher costs being transferred. The Consumer Price Index, a closely watched measure of nationwide inflation, grew 8.6% in the year through May, the fastest pace of price growth since 1981

The report showed that inflationary pressures were still present in nearly all corners of the economy despite the boost from surging gas prices. Hopes for a cooling off are largely dashed with global supply chains still far from healed and gas prices still high.

The team wrote that the findings might be specific to the inflation seen throughout last year, but the lack of any slowdown suggests there's a chance for relief.

"Markups being suddenly high means there is room for them to reverse with little economic harm and with likely societal benefit," Konczal and Lusiani wrote in the brief.

Konczal told Insider that inflation is more persistent than it was last year.

"That said, the large margins these corporations have are still there and they need to come down, or at least if they came down, that would help take pressure away from inflationary pressures," he said.

The Federal Reserve is the main body tasked with slowing inflation but the researchers highlighted several options Congress could pursue if they wanted to fight price hikes at the corporate level Konczal told Insider that antitrust can match supply and demand in more nuanced ways.

The authors wrote that higher markups don't necessarily have to translate to higher profits. They said an excess profit tax could be a solution for the problem of runaway economic gains.

Konczal told Insider that targeting industry concentration can counter soaring prices.

Konczal said that the corporate sector's evolution in the next year or two will determine a lot of the economy's trajectory.

It will likely lead to a bad outcome or worse outcome if policymakers end up hoping for a solution from the Federal Reserve.