I don't think this is true at all, look at the rise of "store brands" often time they are of lower quality and people still pick them because they are cheaper
As an example of a brand people to seek out, People do not buy Toyota brand because it is "fancy" they buy it because it has worked hard to cultivate a reputation for reliability across all of its market lines, where other brands have known to cut corners in quality to lower prices
For example, I will buy Brand name Advil not because the generic is less effective, but because every generic I have found is EXTREMELY bitter to me and the Brand name is not. This is an inactive ingredient, but it makes the product worth more to me, so I buy it.
In your mind I am just buying "for the brand name" when there are "perfectly good" alternatives out there, but to me the alternative are of inferior quality and or missing something I find to be important.
Under perfect competition the economic profits would approach zero.
But you can still have unlimited of accounting profits, even in a perfectly competitive market provided you are delivering enough value to customers with some sort of unique value proposition.
And if high profit means "innovation" it seems like "getting rid of high profit" is the wrong decision?
In other words, the supply is insufficient in the face of overwhelming demand, which is why prices increase in a functioning economy.
Inflation is always a result of monetary policy; if the cash in the system (low interest rates, quantitative easing, government stimulus, etc) is increased without a corresponding increase in output, then inflation will naturally occur because demand for goods and services will increase beyond the capacity of supply. (h/t Nobel Prize winner Milton Friedman)
But, if economic output is actually decreasing because of those same economic policies (such as hiking interest rates or external factors such as war in Ukraine), then we can easily enter stagflation, which is stagnant growth with rampant inflation.
We've had three periods since WWII where inflation hit double digits: the period immediately following the war (1946-1948), 1974-1975 during the oil crisis, and 1979-1983 following Carter's disastrous presidency (partly what he inherited, and then he made it much, much worse).
In the last period (79-83), Paul Volcker immediately took strong action to control inflation by hiking interest rates through the roof. This caused immediate economic pain, but, in concert with lower taxes and reduced regulation, it succeeded in ushering in a strong bull market that lasted, by some definitions, decades.
That's why the central banks are acting strongly to reduce inflation by raising rates, assuming they have the stomach to keep it up even as it might force the economy into a temporary stall: controlling inflation by reducing the money supply through higher rates has historically made for a stronger economy in the near future, and rates can always be reduced to inject stimulus into the economy if needed.
Here's another Milton Friedman quote: "Inflation is the one form of taxation that can be imposed without legislation."