Prices rise as strong demand collides with constraints on the availability of goods and services throughout the US economy.
The price tags of consumer goods, from processed meat to tableware, are up double-digit percentages from a year ago, according to NielsenIQ. Whirlpool Corp. freezers and dishwashers and Scotts Miracle-Gro Co. lawn and garden products are also getting more expensive, the companies say. Some consumers feel stretched.
Kaitlyn Vinson, a program manager in Denver, said her recent bill for $ 275 at a Costco Wholesale Corp. store, which included razors and cotton swabs in addition to her typical grocery list, was more expensive than habit. Ms Vinson said she has moved from buying fresh fruits and vegetables to frozen fruits and vegetables because they are cheaper and last longer.
“We sacrifice the foods that I really love to cook just to be cheaper,” she said.
Costs increase with each step in the production of many goods. The prices of oil, crops and other commodities have skyrocketed this year. Trucking companies pay more scarce drivers to bring these materials to factories and construction sites. As a result, companies charge more for food and consumer products, including aluminum packaging and disposable cups.
Kellogg Co., maker of Frosted Flakes, Cheez-Its and Pringles, said on Thursday rising ingredient, labor and shipping costs were pushing it and other food makers , to increase prices. “We haven’t seen this kind of inflation for many, many years,” said CEO Steve Cahillane.
Investors and economists are watching whether higher prices push up the broader measures of inflation, which have been stifled for years.
Consumer prices jumped 2.6% in the year ended March, according to the Labor Department, the largest 12-month increase since August 2018.
As higher costs trickle down to supply chains, more companies are concluding that their customers will accept higher prices. “They’ve seen price increases throughout the store,” said Whirlpool CEO Marc Bitzer. “I don’t think anyone is surprised right now.”
Warren Buffett, CEO of Berkshire Hathaway Inc., told the conglomerate’s annual meeting on May 1 that the economy is seeing a steep rise in prices. “We are raising the prices, people are raising the prices to us and it is accepted,” said Mr. Buffett. “It’s a really hot economy, and we weren’t expecting it.”
On April 28, Federal Reserve Chairman Jerome Powell said inflationary pressures resulting from supply chain problems would likely be temporary and would not prompt the central bank to change its policies to cut costs of borrowing.
Some manufacturers failed to pass the higher costs on to consumers amid the coronavirus pandemic last year in part because they didn’t want to charge people more for commodities during a crisis, Chris said. Testa, president of distributor United Natural Foods Inc., many manufacturers backed off on the discounts. Today, some food and consumer product manufacturers are raising prices by up to 10%, he said.
Apple costs increase by 10% to 20% depending on the variety, said Mike Ferguson, vice president of products and flowers at Topco Associates LLC, an Elk Grove Village, Ill., Based cooperative that has more than 40 food companies, including the grocer Wegmans Food. Markets Inc. Bananas and leafy greens are also more expensive, Topco said, while vegetable oils and high-oil products like salad dressing and mayonnaise are also more expensive in part because of rising prices. price of ingredients.
“Our overall goal is to cover cost increases,” said Jon Moeller, COO at Procter & Gamble Co. Procter & Gamble is raising prices for baby products, adult diapers and feminine care brands.
Competitor Kimberly-Clark Corp. said it would raise prices by a mid to high figure on Scott toilet papers, Depend adult diapers and Huggies baby care products.
H. Kenneth Fleetwood, a songwriter in Nashville, said he switched to more generic staples such as detergents and recently bought a TV and monitor for his studio before he found the price. lowest at Walmart Inc.
“Penny-pinching is fast becoming the name of the game,” he said.
Devon Dalton, sales manager in Charlotte, North Carolina, said he was also buying more store brands and signed up for a fuel-saving program that offered him cash rewards at stations- service after he and his wife recently paid $ 20,000 more than the listing price to buy their first home.
“It’s all tightening up a bit,” Dalton said. “We’re trying to think about what would be a good way to stay smart with our money.”
Restaurant prices are also increasing. Strong demand for wings and a wave of new fast food chicken sandwiches are pushing up chicken prices. Take-out containers and coolers are more expensive than usual as the production of resin, a key ingredient in plastic, has been disrupted by winter storms in the South this year. Chipotle Mexican Grill Inc. said in April it had increased the prices of delivered food by 4%.
Kevin Hourican, CEO of food distributor Sysco Corp., said that even at higher prices, pent-up demand for restaurants is huge. “People feel bad for their local restaurants. They want to support them, ”he said.
Los Angeles school office manager Khisna Holloway recently ate at a Mexican restaurant with her husband for the first time in over a year. She noticed that her favorite combination of cheese enchilada and chili relleno was about $ 4 more than the last time she visited. It didn’t bother her.
“It was like a treat,” she says.
Some people delay their purchases, hoping the prices will drop.
Nick Davison said he bought a graphics card for his computer for around $ 400 in February 2020. He said similar components are now selling for over $ 1,000 on eBay. He wants to build a second computer to mine the cryptocurrency, but plans to wait to see if component prices drop.
“It doesn’t seem wise to spend so much money on something that is likely to deteriorate in the future,” he said.
Write to Jaewon Kang at [email protected]