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The Wall Street Journal this morning reports that “across corporate America, more companies are wrestling with when and how much to raise prices as raw materials costs climb. The increases pose new hurdles to profits as consumers continue to resist increases.”

Among the companies cited in the story: General Mills and Kraft Foods, which are said to be raising their prices to supermarket chains, expecting them to pass those increases on.

“Grocery stores have struggled with price deflation in the last few years and had welcomed signs of food inflation as a means of raising profits by passing along the higher prices to consumers,” the Journal writes. “But with intense competition for customers resulting in fierce discounting battles among stores, inflation isn't as welcome now. The big chain stores see their costs either already rising or expect them to, and they're growing nervous about the prospect of passing those higher costs on to price-conscious consumers.”

Supervalu CEO Craig Herkert, for example, tells the Journal that he expects "a vendor-by-vendor, and in some cases, item-by-item discussion of what does or does not get passed through" to consumers. He says that “the question for Supervalu is ‘how consumers will react to price increases’.”
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