How is inflation affecting the price of goods?
*In Wall Street Journal, By Austen Hufford and Annie Gasparro, November 1, 2018
“U.S. companies are raising prices on everything from plane tickets to paint, passing on to customers higher costs for fuel, metal and food after years of low inflation.
Clorox Co. CLX +3.38% said it raised prices in the latest quarter on such products as cat litter, and Coca-Cola Co. KO -0.10% reported higher prices for the quarter. Other goods makers, as well as airlines, also have announced price increases over the past week.
“We think 2019 will be more inflationary than we have seen historically since the recession,” Kellogg Co. K -1.54% Chief Executive Steve Cahillane said in an interview Wednesday.
At some point, higher prices could damp the economy’s growth. Investors worry that a pickup in inflation will prompt the Fed to raise interest rates more quickly to prevent the economy from overheating.
Airlines are paying about 40% more for jet fuel than they were a year ago. Trucking costs were up 7% annually in September, as trucking companies passed along their own higher labor costs.
Meanwhile, U.S. manufacturers are paying roughly 8% more for aluminum and 38% more for steel than a year ago as the industry adjusts to tariffs the Trump administration levied on imports of those metals. Also, a 10% tariff the administration imposed in September on $200 billion worth of various goods from China is weighing on businesses that buy those imports.
The leather-goods maker said prices on items made in China could rise by as much as 10% at company-owned stores.
“These are all things that point to prices going up,” said Diane Swonk, chief economist at Grant Thornton. “We might see a pop of inflation in the first quarter.”
Some restaurant companies are raising prices even as they try to attract customers with deals. McDonald’s Corp.’s 2.4% same-store sales growth in the U.S. in the third quarter was fueled by higher-priced burgers. Brinker International Inc. said it raised the price of the two-entrees-and-an-appetizer deal at its Chili’s Grill & Bar chain to $25 from $22.
Food makers had struggled earlier this year to raise prices because supermarket chains and online grocery services insisted on holding down prices as they fought for market share.”
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