In inflationary periods the matter of profitability becomes even more important. Usually when prices and, therefore, costs are rising on a broad front, a business can, in time, pass these costs along through higher prices of its own. However, this often cannot be done immediately. During the interim, obviously a much smaller bite is taken out of the profits of the broad-profit-margin company than occurs for its higher-cost competition, since the higher-cost company is probably facing comparably increased costs of doing business.
