Post-Pandemic Business Culture of Rising Prices: The Impact of Inflationary Pricing Decisions on Profit and Purchasing Power

Theoretical background: The rise of inflation commonly awakes the interest of economists that are the most competent to reveal the root causes of this phenomenon and explain the expected economic consequences. The inflation causing behaviour of economic participants at microeconomic level differs meaningly, but it is expected from economists to explain the consistent patterns of all interest generating economic processes at macro level. Purpose of the article: The research aims to estimate how the inflation influenced the profits of enterprises and purchasing power of consumers in Lithuania during the post-pandemic period. Research methods: The system dynamics modelling, correlation and regression, descriptive statistics, time-series and elasticity analysis methods were applied in empirical research. Main findings: The excess profits and increment of profitability were typical for most economic activities during the post-pandemic period. The general decline in consumer prices by 5% or 10% could be reasonable in case of higher competition and market power of customers. The control of value added of entrepreneurs allowed reach several times higher net profits compared to the growth of real purchasing power of employed population. The aggregated financial and economic data analysis indicated the signs that pricing policies of higher prices and higher profits became the common component of post-pandemic business culture under the inelastic demand in domestic market of products and services.