Archive for October 26th, 2021

Companies plan to keep raising prices…

October 26, 2021

P&G: “We have not seen any material reaction from consumers.” 

That’s the conclusion from a WSJ survey of company execs and industry analysts…

A couple of my takeways…

> Companies are quickly passing along cost increases … with many “adding a little extra” to “get healthy” after the lockdowns.

Example: “Last week, P&G  announced a third round of price increases and told investors to expect profitability to accelerate as the year progresses.”

> The pandemic has left many (most?)  consumers “cash heavy” since they haven’t been traveling, dining out and, in some cases, not paying their rent …  so, many have banked their government stimulus checks.

Many consumers accumulated savings amid the pandemic and are benefiting from higher wages, leaving them with extra cash as the highly contagious Delta variant of the coronavirus keeps them home and lessens the appeal of dining out, staying in hotels and traveling by air.

> So, far, price increases have paid off as shoppers have continued buying — or even buying more to stock up in advance of likely future price increases or supply shortages  to big-name brands.

“We’re seeing price increases that are quite shocking, yet consumers have absorbed these prices without a dip in demand,” said Ben Reich, chief executive of Datasembly, which amasses granular pricing data on a range of consumer goods.

> But, some analysts caution that there’s a limit to how long and how high companies can keep jacking up prices.

As some of the stimulus fades and more price increases kick in, consumers will become increasingly pinched by inflation.

Pricing is going to be more of an issue for consumers, limiting companies’ pricing power.


Bottom line: Expect prices to keep going up for awhile.

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