WORLD> America
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WORLD> America
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As costs rise, inflation's next front is retailers
(Agencies)
Updated: 2008-07-28 10:09 "I think the consumer is just starting to see, not only with us, rising commodity costs and rising general merchandise costs in a much bigger way then they've seen other than with gasoline itself," said Richard Galanti, Costco's chief financial officer, during a conference call Wednesday. Inflation hit 5 percent for the year in June, the highest it's been since 1991, but the price increases hitting manufacturers have been far worse. Prices manufacturers paid for crude materials rose 70 percent for the three months ended in June, but companies weren't able to pass all those increases along. Prices for the intermediate goods made from those materials rose much less, about 27 percent. The prices for finished products made from those goods rose 14 percent, according to the Bureau of Labor Statistics Producer Price Index. Kimberly-Clark Corp., which makes Kleenex, Huggies diapers and Viva paper towels, said Thursday that energy and commodity cost increases this year would total as much as $900 million, double its prediction at the beginning of the year. Saying the company might raise prices for the second time this year, Chief Executive Thomas Falk added, "The reality is that the rapid run-up in commodity costs has outpaced our ability to offset inflation in the near-term with price increases and other actions." The increases keep coming. Dow Chemical Co., the second largest chemical company in the world after Germany's BASF, is raising some prices by as much as 25 percent this month, following June price increases that were as high as 20 percent on all products. The increase is sure to put more pressure on manufacturers, since Dow's chemicals are used in everything from packing peanuts to frozen-food trays to diapers. |
