The price of unleaded gasoline in the U.S. will likely hit a nationwide average of $4 by this summer, said Dan Dicker, oil trader and author of “Oil’s Endless Bid.” The last time prices topped $4 was 2008 and Dicker said there’s a one in three chance that gas could reach $5 a gallon.
If gas prices do head to those lofty levels, that could put a crimp in the economic recovery as consumers will likely cut down on spending if they have to pay more to fill up their cars.
NEW YORK (CNNMoney) — Ben Bernanke and the rest of the Federal Reserve have grown more pessimistic about the state of the U.S. economy.
At the conclusion of a two-day policy meeting, the central bank said that while the recovery is continuing at a moderate pace, growth is somewhat slower than expected. It also said the jobs market is “weaker than anticipated.”
It also issued new economic projections that call for slower economic growth, higher unemployment and higher inflation in 2011 and 2012 than in its previous forecast. At a press conference Wednesday afternoon, Fed chairman Bernanke referred to the new forecast as a significant revision.
Inflation accelerated to its fastest annual pace in two and a half years in April, as surging gas prices continued to hit American consumers.
The Consumer Price Index, the government’s key inflation measure, rose 3.2% over the last 12 months ended April 30, according to Friday’s report from the Labor Department. It was the biggest 12-month jump since October 2008.
Get used to it. This is just the beginning. If you remember, the same thing happened back in 2008 when P&G raised prices by up to 16%.
Procter & Gamble Co. last week notified U.S. retailers that it was raising wholesale prices on Pampers diapers and baby wipes, Charmin toilet tissue and Bounty paper towels, a company spokesman said Monday.
The wholesale price increases amount to 7% for Pampers diapers, 3% for Pampers baby wipes and an average increase of 5% for Bounty and Charmin products.
The price increases come in the wake of rival Kimberly-Clark Corp. on Monday saying it was raising prices on most of the products it sells in North America as it faces higher costs for key materials like wood pulp and fuel. Last month, Kimberly-Clark announced price increases on items like Huggies diapers and Cottenelle bathroom tissue. Source
Kimberly-Clark reported Monday that a bigger-than-expected rise in the cost of raw materials took a toll on first-quarter profit, which fell 9% to $350 million, or 86 cents a share, from $384 million, or 92 cents a share, a year earlier, even as net sales increased 4% to $5 billion.
The Dallas-based company, which also makes Kleenex tissues, said cost increases for raw materials like wood pulp, resins and fuel are likely to run twice as high this year as previously projected. It said it needs to raise prices in response.
Clorox Co., which reports next week, says it is raising the price of Glad trash bags by 9.5% beginning in May. The cost of some of its salad products, like Hidden Valley ranch dressing mix, will also rise.
Shoppers and investors will be watching for similar moves from Colgate-Palmolive Co.,Unilever PLC and Energizer Holdings Inc., which report results this week.
Consumers already are absorbing higher costs for food and gasoline. And price tags are also forecast to begin rising for apparel, reflecting rocketing cotton costs. U.S. consumer prices rose 2.7% in March from a year earlier, the largest increase since December 2009.
“When you look across almost every category out there you are seeing the impact of higher commodity costs show up and higher selling prices for everything,” Kimberly-Clark CEO Thomas Falk said on a conference call to discuss quarterly results Monday.
CHICAGO, March 18 2011 (Reuters) - Procter & Gamble Co will raise U.S. detergent prices by 4.5 percent in June as the world’s largest household products maker starts to respond to rising costs for materials, packaging and transportation.
The maker of Tide, Gain and Era laundry detergents said the increase would go into effect on June 6. Source
What you see here is the manufacturers raising prices on things they know people have to have and are less likely to buy generic. This is just the beginning of commodities price increases. Stock up while you can or BUY GENERIC.
Shoppers are less likely to switch to a cheaper brand on a baby product than many other items on the shopping list, according to a recent survey by Sanford Bernstein analyst Ali Dibadj. Just 10% of consumers said they switched to a cheaper diaper brand because “it’s not worth paying more in this category,” and no consumers reported switching baby food. By comparison, nearly a third of consumers said they switched brands of bleach, bottled water and liquid soap.
Jacking up prices carries marketing risks, even for diapers. Premium brands face intense competition from less-expensive options, especially private-label brands, which gained market share during the recession. Nevertheless, many parents, especially new ones, are willing to splurge on babies even when cutting back elsewhere, believing pricier products are better for comfort or development.
Corn futures continue to sell high, the highest since the 2008 peak.
U.S. corn prices surged 6.5 per cent on Friday to their highest levels since the food crisis of 2008, setting the stage for record global food prices – which have sparked social unrest – to push even higher.
Futures, which rose 4.5 per cent on Thursday, were fuelled by strong demand for corn to make food and fuel. That demand has whittled down the corn supply, which was already at its lowest level in 15 years in the United States, the world’s top exporter of the grain.
Read the rest here at Reuters
The one retailer prepared to cut costs to the bone to save money for consumers now warns that prices will rise very soon — no matter what. Retailers have generally managed to hold prices low despite rising raw materials costs. They had little choice: High U.S. unemployment and lack of credit has kept people out of stores. That’s over, says Wal-Mart CEO Bill Simon. Prices will now rise across the board for all retailers, Wal-Mart included. He called the situation “serious.”
“We’re seeing cost increases starting to come through at a pretty rapid rate,” Simon told USA Today in a meeting with the newspaper’s editorial board.
$105 per barrel oil. Cotton prices at record levels. Food prices at 2008 highs. Typically, such commodity price increases would send central banks running to the U.S. Dollar to secure the value of their savings. After all, the dollar has been the reserve currency since World War I. But not this time. What are they buying instead? Gold The yellow metal hit a fresh record high this morning, while the dollar index dropped to a 15-month low. The news had Fast Money’s Brian Kelly looking to add more gold and silver longs to his portfolio Thursday morning. “What is working is gold, silver and oil ” said Kanundrum Capital’s Kelly. “I wish I had more.” Gold and silver have become the inflation hedges of choice for some investors. Gold hit an intra day high today of $1,448 per ounce. Silver is trading at 31-year highs, hitting an intra day high of $38 per ounce.
Central banks are shedding dollars, reducing their holdings by about $9 billion in previous quarter, according to Nomura Securities’ Jens Nordvig, global head of G10 FX Strategy.
U.S. consumers could see food costs spiking to levels seen during the food crisis of 2008 as higher commodity and energy prices force companies to raise prices on products lining grocery store shelves, the Agriculture Department said on Thursday. Food prices are forecast to rise a sharp 3.5 percent this year — nearly double the overall inflation rate. The lion’s share of the increase is expected in the second half of 2011 when the recent uptick for commodities, such as corn and soybeans, makes its way through the food system. Just last month, USDA forecast an increase of 2.5 percent in 2011. Food prices soared to 4 percent in 2007 and rose to 5.5 percent a year later — the biggest increase since 1990 — as stockpiles ran low around the world.
FOOD INFLATION COULD LEAD TO RIOTS Global food inflation, the result of growing demand for food and tight commodity supplies following catastrophic storms and droughts in leading agriculture producers such as Russia and Australia, is a growing worry for world leaders. World Bank chief Robert Zoellick said last week global food prices have reached “dangerous levels,” and warned they could complicate fragile political and social conditions in the Middle East and Central Asia. It would be a stark similarity to 2008 when soaring food prices sparked food riots and led to political instability in some parts of the world, including Haiti and Egypt. Agriculture Secretary Tom Vilsack said the United States and other global producers are “better prepared to respond” to rising food prices after the run-up in 2007 and 2008. “We’re keeping an eye on this,” he said.
Please respect FT.com’s ts&cs and copyright policy which allow you to: share links; copy content for personal use; & redistribute limited extracts. Email ftsales.support@ft.com to buy additional rights or use this link to reference the article - http://www.ft.com/cms/s/0/eca47380-3dc4-11e0-ae2a-00144feabdc0.html#ixzz1EexsWAZlFor consumers specifically, the ramifications are serious as the debt service burden has risen to 24 per cent of disposable income and is set to rise further as rates push higher. We expect the burden to rise to an exorbitant 30 per cent by 2012. To put this into context, the US consumer “blew up” when the debt service burden hit 14 per cent (with a current read of approximately 12 per cent). In other words, the Brazilian consumer has twice the debt load from a cash flow perspective relative to a US consumer who is still widely regarded as being over leveraged.
The situation in Brazil is worryingly similar to the sub-prime crisis in the US. A lot of credit is being pushed by the banks at high rates to consumers who ultimately won’t be able to service the debt.
Hmmm, I’ll have to see this to believe it. I lack trust in my own government, I have none at all for China.
China has “abundant” grain reserves to meet demand and the current drought won’t affect international food prices, Foreign Ministry Spokesman Ma Zhaoxu told reporters in Beijing today.
“The recent drought may have some impact on the winter wheat production,” Ma said. “But authorities are taking active measures to minimize the impact.”
China is almost self-sufficient in food, importing only about 5 percent of its needs, so the country has little impact on global prices, Ma said.
Wheat futures climbed to a record in China yesterday, gaining 3.5 percent to 3,104 yuan ($471) a ton, on speculation the drought will cut China’s production and boost its imports of the grain. Food prices in China rose 10.3 percent in January from a year earlier, higher than December’s 9.6 percent increase, the National Bureau of Statistics reported today.
Americans should brace for higher food prices this year now that demand for corn has pushed U.S. supplies to their lowest point in 15 years.
Higher projected orders from the ethanol industry sent corn futures soaring Wednesday, as corn supplies became the latest commodity to plummet. Low levels of wheat, coffee, soybeans and other food staples have already sent prices surging on the global market.
As those reserves decline, U.S. food companies are warning of retail price increases.
The ethanol industry’s projected corn orders this year have risen 8 percent, to 13 billion bushels, after record-high production in December and January, the Agriculture Department said Wednesday.
That means the United States will have a reserve of 675 million bushels left over in late August when this year’s harvest begins. That’s roughly 5 percent of all corn that will be consumed, the lowest surplus level since 1996.
Marc Faber: Real U.S. Price Inflation Currently Between 5% and 8%
Marc Faber was on CNBC today live from the Russian Forum in Moscow and said that real U.S. price inflation is already between 5% and 8%, much higher than the CPI’s reported year-over-year inflation rate of 1.5%. This is in line with NIA’s comments in recent weeks that we estimate U.S. price inflation to be a minimum of 5%. (via Marc Faber: Real U.S. Price Inflation Currently Between 5% and 8% | National Inflation Association Blog)
