By Tom Parkin
March 26th, 2025
BURLINGTON, ON
In a time of inflation, a company that can pass price hikes on to customers will do fine. And one that hits customer resistance might perish.
But those that can pass on costs and add just a bit of garnishment while people are looking the other way can really flourish.
And it seems there was quite a bit of garnish being added after 2021 as COVID-caused shipping bottlenecks and factory closures created shortages while a new Russian embargo set oil prices soaring, Statistics Canada data shows.
Mark-up on operating costs rose from 10 to 15 per cent
In 2021, mark-ups on company operating costs surged to new heights as Canadians learned to live more poorly and Conservative leader Pierre Poilievre deflected Canadians’ anger about it all onto the carbon tax.
Mark-up is defined as profit divided by operating costs. A company with a $10 million profit on a $100 million operation has a mark-up of 10 per cent, which was about the rate for corporate Canada as a whole from about 2006 to 2017, according to the analysis from DT Cochrane, chief economist at the Canadian Labour Congress.
But Cochrane’s analysis, in his chart above, shows mark-ups surged to a new level, about 15 per cent, in 2021, where they have remained since.
Corporate Canada’s operating costs did rise with the inflation wave caused by factors outside Canada, as shown in Cochrane’s chart below, which compares actual corporate expenses with their historic trendline. Corporate costs started to move ahead faster than historic rates around 2021.
Canadian companies turbo-charged inflation imported from outside Canada
But mark-ups didn’t stay stable, keeping companies on pace with inflation. They rose, accelerating inflation.
Perhaps external factors pushed that company with a 10 per cent mark-up on a $100 million operation to costs of $110 million. But what the data shows is such company didn’t increase profit to $11 million, maintaining that 10 per cent mark-up and keeping profit on pace with inflation.
No, on the new $110 million cost base, amid the deflection of blame onto the carbon tax, that company was able to hike prices enough to push the mark-up to 15 per cent, or $16.5 million profit.
A company that can push a $10 million profit to a $16.5 million profit amid 10 per cent inflation is doing very okay. A lot better than Canadians were doing.
Cochrane’s analysis shows corporate Canada internally turbo-charged the inflation shock imported from outside Canada. And he calculates that shift from 2019 mark-up rates added $741 billion more to prices paid by customers since 2021.
Heck of a garnish!
Only a dishonest politician could tell people the reason the average Canadian price at the pump roared ahead from 78 cents in April 2020 to $2.07 in June 2022 was an additional few cents in tax.
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Chaos can benefit businesses, but it is detrimental to the end-user. It serves as a measure of imperfection. For example, weather forecasts can impact the end user, while unpredictable chaos can be planned for, like budgeting for cost overruns or submitting an inflated fiscal budget, which will also affect the end user. Additionally, factors such as insurance premiums, and losses due to theft or insolvency directly impact the end user. Bribery and corruption, along with share price increases benefiting individual stockholders or pension funds, reveal that the same chaos can affect various end-users in life. Any radical change to stability brings with it the risk of chaos.
Thank God, someone demonstrated with facts the dishonesty of PPCon and his typical Con habit of lying about money and blame. Harris did it about Education. PP con kept it up rudely about Carney and the carbon tax. Even now, all I hear is his continuing long winded blather about how bad Canada is about everything – sounds like a dozen things in a row with his family – and how he will fix everything for everybody at no cost in money, deficits, or public and social programs.
And he has the lying nerve to say he will fix everything, including even more than before, the tariff war, without any sign at all a minimal plan. He can’t even count inflation, or debt, or budget sense. I have been saying this many times in my comments here in the Gazette.
Trust not the words of this man -PPCon.