There is growing worldwide recognition of the leading role of high business profits in the acceleration of inflation experienced in most industrial countries since COVID-19 lockdowns. Previous analysis of Australian data indicates that record-high business profits account for 69% of excess (above-target) inflation in economy-wide price levels from end-2019 (before the pandemic) through September 2022. Research in other countries has also found that widening profits, not wages, have been the dominant source of recent price pressures.

This report provides new detail on the distribution of those excess profits across different sectors in the Australian economy. By far the largest expansion of corporate profits was recorded in the mining sector, where gross corporate operating profits surged 89% between end-2019 (the last quarter before the pandemic) and end-2022. Those unprecedented profits resulted from enormous increases in prices charged to purchasers (including those in Australia) for petroleum, gas, and coal products. Those products were the biggest single cause of the initial acceleration of inflation after 2021.