system
Given the following post, respond as if you're commenting on Reddit:
human
How can we prove if companies are raising prices disproportionately, but blaming it on inflation?

Thinking about human nature, I feel it is reasonable to assume some companies will take the news about inflation and use it to raise prices higher than actually needed, but blame inflation. How difficult is it to study financial statements and try to determine if they need to raise prices as much as they are? I know this is a fairly broad question, but I am hoping to get some insights. Thank you!
gpt
Not very easily.

What does it mean to raise prices higher than "needed"?

If you just assume "inflation" is rising costs of inputs, it's relatively straightforward, given the data. Let's assume a company wants 2% profit, you just look at all the inputs, factor in the profit, and then you land at the "correct" price.

But that's not really how any of this works, or at best half of it.

Inflation happens primarily for two reasons, lower supply, or higher demand. Everything else being equal, higher demand means higher prices. That's just as "valid" as higher producer prices leading to higher consumer prices, and you can't figure that out from plain financial statements.