Interest rates, the Russian war in Ukraine and a supply chain crunch are all blamed for surging inflation that is eroding the value of worker's pay packets.
But there's another element: soaring company profits.
"The strength in profits has come despite firms facing very elevated cost pressures," NAB senior economist Brody Viney said.
Australia Institute executive director Richard Dennis added: "What the data says is that profits are rising across Australia. Collectively, firms have never had it so good."
The latest look at businesses around the nation shows corporate profit leapt 28 per cent last year.
Wages grew too, but by less than 2 per cent.
Profit crisis
Australian Council of Trade Unions (ACTU) secretary Sally McManus calls it a crisis, blaming the greed of companies for boosting inflation that is hitting every consumer.
"We've definitely got a profit crisis at the moment. It's driving inflation. It's the reason why inflation is high," she said.
That might seem a predictable answer from a union leader, but probably not from the chief economist of UBS Global Wealth Management.
The gigantic global firm's Paul Donovan wrote in the Financial Times that, outside of commodity prices, inflation is rising around the world because of corporate profits, not wages.
"The broadening of inflation beyond commodity prices is more profit margin expansion than wage cost pressures," he said.
This does not mean every company is raking it in or that individual companies have not had to trim profit to deal with exploding costs.
But as labour, materials and energy rise, making life harder for businesses and consumers, are high profits adding to that pressure?
Not a game
In the neon glow of Fortress Melbourne, underneath a Melbourne shopping centre, the picture is more complex.
Walking through the venue — home to an esports stadium, PC games, a boardgame library and whirring arcade machines — co-founder and chief executive Jon Satterley is enjoying the buzz of a busy Friday night.
But it has been tough as costs have risen.
"Just even interest rates on loans and everything else," he said.
"Pressures are certainly being felt in those more bog standard utilities, all the things that you don't pay often much attention to, we're paying attention to.
"Utilities are by their very nature commodities that you don't have much wiggle room in, even insurance just seems it's all pretty much one uniform, ugly price."
The massive venue, underneath a glittering shopping mall in the Melbourne's central business district, opened on March 13, 2020 – the same day the cancellation of the Formula 1 Grand Prix signalled the start of the first nationwide COVID lockdowns.
"We were kind of in our own disaster movie, sprinting from the earthquake, as it all happened around us," he said.
Even as the impact of lockdowns and restrictions has eased, a new threat emerged: inflation.
The rocketing cost of living means it is difficult for the business to raise prices. But with competition for staff meaning higher wages, and every cost inflating, there is precious little that can be cut.
Mr Satterley said the answer is not to charge customers more.
"What you need to do is not just 'jack prices up', but reframe and change how you bundle offers and value," he said.
As an example at Fortress Melbourne, the menu was updated to add extra items customers had been asking for.
"We could charge a price that we felt was the right price, and introduced new food options that weren't there. So we've got a better offering with different pricing … rather than just blanket price rises," he said.
The squeeze on profits is forcing the business to examine itself. The game arcade is busy but the private function room is large and less profitable. So it is likely the arcade will be expanded, taking more of the function space.
"That's a way we can raise yields without sacrificing customer experience, without compromising or adding just arbitrary price rises to the mix," he said.
"These are the things we think we've got a lot more work to do before just saying, 'Oh, just ride it out and suffer the consequences of a downturn in the economy'."
Profit surge
What no-one disputes is that inflation is high. Consumer prices have risen by 7.3 per cent over the last 12 months in the fastest rate of inflation since 1990, and officials fear inflation will hit 8 per cent by the end of the year.
Dr Denniss said rising wages costs have played an "insignificant role" in the recent inflation spike.
His recent research suggests bigger pay packets account for just 15 per cent of price increases, while profits have played a much larger role, accounting for about 60 per cent of recent inflation.
"Well, the data says that profits are rising … but every individual company that speaks out is apparently the one that's doing it tough right now. I'd just like one company to come out and say, 'It's me. We're the ones making record profits'," he said.
NAB senior economist Brody Viney said businesses are facing bigger costs: with global supply chain disruptions, higher energy costs and a tight labour market.
But that has not dented demand.
"[That has] been the critical factor here, allowing firms to pass on these higher costs and therefore maintain their profit margins – driving inflation in the process," Mr Viney said.
"Consumers seem to have been prepared to weather higher prices for the time being after several years of restrictions limiting the scope to travel, shop and eat out."
And with more people in work thanks to a low unemployment rate, people have jobs to support that spending.
Greed-flation
Ms McManus is scathing of corporate decision-makers that are maximising profit.
"It's because big companies in Australia think they can get away with putting up prices," she said.
"And they are putting up prices, and they're reaping in massive profits. This is the big problem. It needs to be spoken about and named for what it is."
The boss of the union's peak body, which represents 38 affiliated unions and says it represents almost 2 million workers, said the price rises are counter-productive.
Companies are "shooting themselves in the foot", she said, because wages are not growing. Workers are also consumers and inflation means they have less money to spend.
Wage growth has been stagnant for a decade.
It is always promised and predicted but never seems to come, according to Ms McManus.
"We've always been told 'We're just gonna wait for profits to go up and wages will go up'," she said.
"When that doesn't happen, 'Oh, we've got to get productivity up'. Well, productivity goes up and wages don't. And then we get told, 'We've just got to wait for unemployment to get low enough'. Well, it's at record low levels, still, wages aren't going up."
Union decline
Unions represent employees, particularly in negotiations with employers about wages and conditions, but they have lost power.
The economy has changed in recent decades from a focus on massive employers centred in industries like manufacturing to a splintered workforce in small service-based businesses.
At the same time, laws that stymied the ability of unions to recruit and retain members have seen the percentage of workers who are members fall from 40 per cent in 1992 to 14 per cent in 2020, according to the Australian Bureau of Statistics.
Linked to this has been a collapse in the amount of strike action, and stagnating wage growth.
The Bureau's study found employees who were trade union members made on average $1,450 per week, compared to $1,100 for employees who were not, with union members earning more on average whether they were managers, professionals or labourers.
Only in the category of "sales workers" did non-union members have higher average wages than union members.
"Finally, people are waking up to the fact this is actually an issue of bargaining power – workers don't have enough of it," Ms McManus said.
"We need to make changes if we're going to ever turn around the problem of low wage growth that we've got."
Capital crunch
Dr Peter Burn, chief policy officer at industry association the Ai Group, can see how it looks: profit growth is sprinting while wage growth is crawling, fuelling inflationary pressure.
"Oh, I think people can feel like they've been left behind if they look at those sorts of aggregate numbers," he said.
But, he contends, this does not take into account the way the economy has shifted in recent decades.
Massive investment in expensive information technology and eye-watering outlays on building mines have required that the ratio of what is returned as profit or labour costs has changed.
"As production becomes more capital intensive, so the ratio of capital to labour rises," he said, explaining companies are spending more on stuff and less on people.
He said when that "capital to labour ratio" is rising, it is fair to expect that the owners of capital (companies) would get a larger share than the providers of labour (workers).
"The mining investment boom was the biggest investment boom, relative to gross domestic product (GDP) since the gold rushes in Australia," Dr Burn said.
That huge increase in the amount of money invested into the Australian economy demanded a return, but it is not entirely at the expense of working people, he said.
"A major change in Australia over the last 20 to 30 years has been the rise of what's called 'worker's capital', in superannuation funds. So a rising share of total profits goes to increases in employees superannuation accounts … workers own a larger share of the capital than they used to," he said.
Corporate choices
Dr Denniss acknowledges that some individual companies are not doing well, but his broad assertion about the rude health of most businesses is backed up by the national accounts from the Australian Bureau of Statistics.
Corporate profits, as a share of key costs (known as factor income) hit 32.9 per cent in the June quarter – a new record. Wages hit a new low of 48.5 per cent.
"We just need to stop this phoney conversation about employers having no choice but to lift prices and no capacity to lift wages," he said.
"They have a choice, they're just making choices that are good for their profits. Not good for us.
"They can accept lower profit margins. And they could also pay higher wages."
Fortress mentality
Back at Fortress Melbourne, the team is preparing for a big weekend with hundreds of punters set to watch an esports event beamed in to the 200-seat theatre.
Already, the business has secured a Sydney site and is working on a plan to take the brand beyond our shores.
"The dream is a big one," Mr Satterley said, with flagship venues in major cities, not necessarily all in Australia, and smaller venues in other areas.
"It's a big business all about building a home for gamers to enjoy all sorts of games. From your PC games and role playing games, board games, tabletop games, arcade games, games, culture, all sorts of games."
