Archive for the ‘inflation’ Category

Companies plan to keep raising prices…

October 26, 2021

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

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

Inflation: More about the lumber price shock…

July 20, 2021

Yesterday, we pointed out that In June, year-over-year inflation reached a 13-year high.

Today, let’s drill down on my personal inflation benchmark: lumber prices:

Loyal readers might remember that a couple of weeks ago, I whined about sky-rocketed lumber prices.

See Ouch: I just paid $3,700 for $1,200 of lumber …

Since then, lumber prices have “corrected” somewhat … down about 60% from the peak … but still 50% higher than a year ago.

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That doesn’t lessen the pocketbook sting from my completed project, but it gives me some hope for my next lumber-intensive project: re-planking my retirement home’s dock.

For that project, I’ll be buying lots of #2 prime pressure-treated boards measuring 2 in. x 8 in. x 8 ft.

That’s my personal inflation pain point these days.

Not that long ago, I used to pay about $5 per board.

A couple of weeks ago, Home Depot was charging a whopping $17.98.

Last week the price dropped to $12.99 … a 27% price drop.

This week, the price is down to $10.99 … another 15% price-shaving.

That’s still double what I used to pay … but the price is heading in the right direction!

That is, unless Bidenomics strikes again…

And, as many news sources are reporting, that’s not a far-fetched worry:

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Yipes.

“In June, year-over-year inflation reached a 13-year high.”

July 19, 2021

That’s the mega-takeaway from the most recent gov’t report.
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June’s 5.4% follows May’s 5% and April’s 4% 

Press Secretary Psaki says, based on the administration’s arithmetic, we shouldn’t worry. She noted that  she and Biden — the ever sharp shoppers — paid 16 cents less for their July 4th BBQs.

For the rest of us, in real terms, the inflation shock means that our paychecks are in only buying about 95% of what they did a year ago … and, excluding our new contributions and  stock market gains, the “real” value of our IRA is shrinking at a 5.4% annual rate.

Ouch…

Joe says: “What inflation?”

June 14, 2021

The government reported CPI went up 5% in May.

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Source: WaPo

Though Biden and his team of free-spenders are sanguine, ordinary folks are starting to notice.

Let’s look at a couple of benchmarks…

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Gasoline

Key consumer benchmark: gasoline prices … they’re up a whopping 47% in the past year.

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Housing

Zillow says that the price of a typical mid-tier existing home is up 13.2% over the past year … and is projected to go up another 14% this year … for a combined impact of almost 30%.

The price of new homes is skyrocketing …  in part, because of the almost quadrupling of lumber prices.

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According to CNBC the surge in lumber prices in the past year has added $35,872 to the price of an average new single-family home … which translates to about $15 per square foot … just for lumber!

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Food

The measured CPI for food rose “only” 2.2% in the government calculation.

Many (most?) consumers scoff at the 2.2% number … and benchmark their high volume staples (e.g milk, diapers) or personal favorites.

For example, a Homa family benchmark is the price of an Arby roast beef sandwich.

Not that long ago, Arby would regularly promote the sandwiches at 5 for $5.

Earlier this year, Arby’s went to 5 for $10.

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Now, my price scouts report that an Arby’s roast beef sandwich regularly costs $4 …and the special is 2 for $6  … at $3 a sandwich, that’s up 50% from earlier this year, and triple the price from the good old days.

Ouch.

This inflation thing is getting personal….


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