Rising consumer prices may be here to stay, according to financial experts
HOUSTON - We've all noticed prices, for all kinds of things, have been on the rise. Inflation is the 'buzzword' that gets tossed around.
In September, consumer prices rose 5.4% compared to a year ago.
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While manufacturers have blamed Covid and supply-chain challenges for their price hikes, the added cost of living is likely to stay
Ikea is the latest to announce rising prices, after reporting a drop in profits due to higher costs for transportation and raw materials. They're not alone. New vehicles are more expensive, as is construction, but consumers may feel the most immediate pinch in their grocery bill, as prices rise in nearly every sector.
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In a recent Facebook post, most respondents say they're feeling the pinch. Cheryl Owens writes, "My groceries have gone up double for the last 3 weeks. It’s absolutely ridiculous." Karen Ladd adds, "(I) Found a better paying job and now I am using the better pay to get the same amount of groceries and gas."
Houston financial planner Rich Rosso says we need to get used to it.
"If Proctor & Gamble raises the price of Tide-pods, they're not going to go back and lower them, again," he warns.
While manufacturers may, legitimately, complain about supply-chain problems, it also provides some cover to raise prices and boost profits. Unilever the maker of diverse products from Dove soap to Breyer's ice cream has announced its highest price spike in a decade.
Once losses have been recouped, however, financial experts say the higher prices are likely to remain, to satisfy investor demands. That's the rub, for consumers, whose wages aren't keeping pace with their expenses.
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"Companies are loving this pricing power," says Rosso. "But households, if their real-wages continue to say negative, that's going to be a problem and you might see spending drop off next year."
Leaders for a number of companies have already suggested consumers are 'comfortable' with the latest price hikes and are willing to pay the price. The trick for manufacturers is deciding 'how high' they can raise prices before turning consumers off.