I’m starting to lean towards the notion that this will not be a transitory inflationary period. If a federal $15 minimum wage comes to pass combined with further climate change regulations there is nowhere for costs to go except up.
Tags: economy, inflation
“In an environment where inflation continues to rise quarter after quarter after quarter, there are certain sticking points within our ability to push it through,” said Fastenal finance chief Holden Lewis. “Inflation in the marketplace can rise at a much more methodical and smooth pace than our ability to change prices can.”
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.
“We still think our products’ price points have room to move north based on the quality that we offer,” Chief Executive Sean Connolly told investors last week, noting that widespread increases across grocery aisles seem to leave consumers more willing to pay so far. “You don’t generally get a customer to accept inflation-justified pricing until they’re confident it’s not transitory inflation,” he said.
How hard companies continue to push to raise prices, and how well they succeed, is at the heart of the current concern about inflation. The more companies succeed, the more traction price inflation is likely to gain, keeping prices high and rising. If the price increases falter, inflation is likely to ease as labor and supply shortages diminish and the pandemic’s economic effects recede.Wall Street Journal