From the Wall Street Journal:
"Faced with rising costs for materials, transportation and workers, companies are charging more for products from metal fasteners to Oreo cookies, helping fuel inflation like the U.S. hasn’t seen in more than a decade.
"As customers accept the price hikes, some big companies said they expect to raise prices even more. Others are more cautious, unsure if U.S. consumers have the appetite to absorb additional increases.
"What companies decide will go a long way to answering a question that has surged to the top of executives’ and economists’ agendas this year: Is the recent jump in inflation transitory, as the Federal Reserve predicts, or persistent, as some executives warn?"
Some examples cited in the Journal story:
• "Conagra, which makes Birds Eye frozen vegetables and Slim Jim meat snacks, among hundreds of other food products, couldn’t raise prices enough in the most recent quarter to make up for its own rising costs, including for cooking oils, packaging and transportation. It expects price increases and other measures to offset its costs later this year, and said it might need to raise prices further."
• "Snack giant Mondelez International Inc. raised prices on Oreo cookies and other snacks this year, and told investors last month it is considering price increases for 2022 based on the commodity cost inflation it expects. That could mean smaller packages bearing the same price tag, or less discounting, both of which serve to raise the company’s average selling price."
• "Price increases by Hormel Foods Corp. for products including its Jennie-O ground turkey and Skippy peanut butter so far haven’t covered the company’s higher costs for peanuts, oil and plastic containers, among other inputs, the Austin, Minn., company said. It expects more price increases later this year."
• "General Mills Inc. CEO Jeff Harmening, whose company makes Betty Crocker cake mixes and Cheerios cereal, said unusually high consumer savings might make Americans less sensitive to price increases than usual."
- KC's View:
My sense from talking to a number of retailers is that there is some level of skepticism about some of these price increases. There's no doubt that the cost of some raw materials is going up, but there's also a suspicion that in many cases, companies are taking advantage of the moment.