Ho hum inflation du jour:
Posted 5/4/2004 12:25 AM
Consumer goods prices edge higher
By Julie Schmit, USA TODAY
Gas and milk prices grab headlines, but other consumer goods are going up in price, too.
A smattering of firms are raising prices for the first time in years, largely to offset higher raw material costs. The increases might not stick and are far from widespread. But they are notable because they've been rare for so long and might lead to more. "The over-arching trend ... is that businesses are beginning to show a little pricing power," says Joel Naroff, president of Naroff Economic Advisors.
Rising prices are likely to be discussed by the Federal Reserve Board as it meets Tuesday. It isn't expected to raise interest rates, but many economists expect a bump by year's end. Seeing price increases:
•Furniture. Dorel Industries of Montreal, which makes ready-to-assemble furniture, said last week that higher prices are coming in a few weeks. Particle-board costs have increased across the industry. Earlier, Bush Industries of New York raised prices 7.9% on pre-assembled and ready-to-assemble furniture. The increase was its first in more than four years.
•Paper products. Procter & Gamble in July will boost prices to retailers about 6% for Bounty paper towels and Charmin toilet paper — the first increase in four years. Kimberly-Clark has a similar increase set for July and August for tissue, paper towels and napkins. Georgia-Pacific is raising prices, too. Behind the jump: pulp prices up 20% in 18 months.
Whether retailers such as Wal-Mart pass those costs to consumers remains to be seen. Spokeswoman Karen Burk says Wal-Mart is committed to the lowest prices but that "we appreciate the challenges our suppliers are facing."
•Pet food. The cost of popular brand Iams will rise 4.5% in August — the first rise since 2001. Last month, Science Diet rose 3%. Earlier, Nestlé Purina PetCare raised domestic prices 6%.
Others signaling increases include toolmaker The Stanley Works, battling higher steel costs.
Everything isn't more costly. March's consumer price index showed prices fell for many goods, including cars and PCs. Many firms have been unable to raise prices.
Higher prices eventually lead to more jobs and higher wages. For now, consumers will feel it. Wages and salaries rose just 0.6% in the first quarter. Meanwhile, regular gas prices are at record highs. Cheese and butter prices are about double what they were a year ago. Saturday, the minimum price paid to U.S. dairy farmers for milk went up 50 cents a gallon. Hormel Foods in June will raise prices 4.5% to 6.5% on dozens of brands from Spam to Dinty Moore stew.
Naroff expects 2004 food costs to rise 2.5% to 3% from last year.
Debbie Patt, owner of 11-employee Clarendon Cheesecakes in Holley, N.Y., absorbed rising egg costs months ago. But a 40% jump in cream cheese costs and higher shipping costs forced her to act. Her cheesecakes now cost $22.95, up $3. "Everything is going up, and I'm nervous about it." |
