Consumer and industrial products. We're being hit by raw material increases (iron ore up 71.5%-105% this year, impacting steel 10%), plastics (PVC, HDPE, LDPE, PP, TPR, Nylon, etc), freight due to oil, increases due to currency exchange, and high energy costs due to power shortages in factories.
We got hit with a lot of increases last year due to material increases, but we were able to smooth that over a bit with smart currency management and better inventory management. No more this year.
We're also hit with higher interest rates, higher sales costs due to additional allowances and dating customers demand now, and higher overhead from health care, insurance, and other things.
The price increases take a while to get passed down the line. The manufacturers try to hold out as long as they can, and then the distributors do the same, and finally it gets passed along to the retailer. When the retailer gets the increase, the retailer may not pass it along immediately due to competitive concerns. However, it will be passed along eventually.
There's a pretty good lag in the time a price increases at the manufacturing source to the time it is passed along to the consumer. High volume and high ticket items are exceptions, as they get passed along quicker.
I think we'll be seeing lots of price increases in the end of this year and early next year. Sheesh, domestic trucking freight increases alone are accounting for probably 3% of that for us. |
