Paying Higher Prices
Consumers continue paying higher prices every day as the Biden administration’s spending continues to flood money into the US. First, home prices spiked, then rents spiked. For those facing difficulty paying a mortgage or rent, next comes inflation in the rest of the items. Insurance, utility bills, food, gasoline, and even household items like detergent have increases in prices pushed out rapidly. Winning Mortgage, Winning Home outlines budgeting help and planning for home mortgages, loan payments, and all around daily expenses to not get caught going delinquent.
Find out how FOMO has helped drive inflation higher.
November 4, 2021 new data shows costs for workers may provide a big boost to higher inflation. A large jump in labor costs in the third quarter of 2021 at an 8.3% annualized rate.
| Released On 11/4/2021 8:30:00 AM For 3rd Quarter 2021 |
| Nonfarm Productivity – Annualized Rate of Increase (Decrease) -5.0 % Unit Labor Costs – Annualized Rate of Increase (Decrease) 8.3 % |
Some of the Areas Where You Are Paying Higher Prices
Some of the world’s biggest companies are betting consumers will keep paying more for products. Corporate giants including Procter & Gamble Co., Nestlé SA and Verizon Communications Inc. say they plan to continue raising prices. They also plan to push customers to buy more expensive products. Producers such as these have seen bigger cost increases and are only now passing these to you. Even your Chipotle burritos could get more expensive in coming months.
Price increases so far have paid off for makers of household staples. Shoppers, particularly in the U.S. and Western Europe, have remained loyal to big-name brands. Now companies are counting on customers to lift sales and offset higher costs. Those costs have challenged profits lately. But, as broader inflationary pressures mount, companies have recently aggressively passed costs to consumers. “We have not seen any material reaction from consumers,” P&G finance chief Andre Schulten said.
(Treasury Secretary) YELLEN SAYS AMERICANS HAVEN’T SEEN CURRENT INFLATION RATE ‘IN A LONG TIME’
Companies benefiting from the dynamics have told investors to expect solid sales and profitability in 2022. This despite rising costs tied to supply-chain woes which show no signs of letting up. P&G, maker of Tide detergent and Pampers diapers, last week announced a third round of price increases. These will go into effect over the next few months. Nestlé, the world’s largest packaged-food company, raised its full-year guidance for the second-straight quarter.
Chipotle Mexican Grill Inc. said price increases haven’t turned people off its burritos. Higher menu prices helped net income more than double in the most recent quarter. This despite higher labor and wholesale food costs.
CHIPOTLE COULD COMBAT INFLATION WITH MORE MENU PRICE INCREASES
U.S. inflation accelerated in September. The consumer-price index rose by 5.4% from a year earlier. This matched its highest rate in over a decade. Other measures of inflation reached a 30 year high according to the US Labor Department. Many economists expect this stretch of higher inflation to linger. As some of the stimulus fades and people start paying their rents, price increases will be more of an issue in consumer wallets.
INFLATION WILL ‘UNDERMINE’ US ECONOMY, GROWTH OVER TIME: THOMAS HOENIG (Federal Reserve)
“I don’t see what else we can do about food prices besides just paying it,” is a frequent refrain. Examples include increases in meat prices as well as some shortages and empty shelves. In some areas, the cost of bacon has doubled recently. “We’re seeing price increases that are quite shocking….” said Ben Reich, chief executive of Datasembly, which amasses granular pricing data on a range of consumer goods.
A price increase by a manufacturer might not be immediately evident to consumers. Often, companies might increase prices by shrinking package sizes. The biggest U.S. grocers say they have been insulating consumers from price increases, but that is starting to change. Kroger and Albertsons both said they would begin passing more costs along to shoppers to protect their own profitability. “We’ve been very comfortable with our ability to pass on the increases that we’ve seen at this point,” Kroger finance chief Gary Millerchip said in a recent call with analysts. “And we would expect that to continue to be the case.”
Higher Inflation Expected to Persist
Billionaire bond investor Jeffrey Gundlach said Friday that inflation in consumer prices likely will remain elevated through 2021 and stay above 4% through at least 2022. Citing pressures from housing (ownership and renting) costs and rising wages, he told CNBC that he sees the current inflation run as non-transitory and instead likely to persist well into the future. And he doesn’t believe inflation will drop below 4% anytime in 2022. His comments come with the CPI increasing at a 5.4% annual pace, the fastest in 30 years. He expects consumers to continue paying higher prices this year and even higher prices next year.
Fed officials insist that the current price increases are transitory. While Gundlach conceded that some of the increases, such as lumber and some other commodities, are temporary, others are not. One factor he cited is shelter costs, which make up about one-third of the CPI and have been rising steadily this year.
Home Price Forecast
According to CoreLogic, a giant in the mortgage information industry, price changes are forecast to dramatically fall over the next 12 months.
