Price elasticity of demand (=sensitivity to price changes). If the seller is afraid that higher prices will significantly impact sales (people won't buy the product or buy alternatives), it might accept a lower margin in order to maintain the volume.
Also market competition can be a factor: if competitors are not raising prices (or by smaller amounts), you might lose market share.
Also market competition can be a factor: if competitors are not raising prices (or by smaller amounts), you might lose market share.