Company Costs Are Rising, but Getting Shoppers to Pay More Is Hard | WSJ

Higher input costs are pressuring U.S. companies to raise prices—a potential precursor to more consumer inflation—but shoppers are resisting their efforts to do so.

Businesses are facing higher costs for everything from fuel and freight hauling to steel to accounting services. Input price increases have outstripped consumer price increases since late 2016, with some pipeline costs rising at two or three times the rate of consumer inflation, according to Labor Department data released on Wednesday.

“Nobody breaks out the party hats when we come in with a price increase,” said Mr. Hayes. But “going forward, product prices must reflect the true cost because we cannot subsidize the increased freight.”

Across industries, input prices began climbing in 2016 and are outpacing overall inflation.

Intermediate prices for processed goods—a proxy for the cost of goods such as metals, paint and fuel—rose 4.7% in April from a year earlier, the Labor Department said. In that category, gasoline prices were up 14.6% from a year earlier and steel mill products were up 7.4%. Intermediate services prices—everything from warehousing costs to security guards—rose 3.1% from a year earlier. In that category truck transportation of freight was up 6% from a year earlier.

Those input costs for businesses were rising faster than business charges to their customers, which were up 2.6% in April from a year earlier, the Labor Department said. The consumer price index is also rising at a slower pace—2.4% from a year earlier in March—according to the Labor Department. After years of low household inflation, consumers are apt to balk at more aggressive price increases.

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Company Costs Are Rising, but Getting Shoppers to Pay More Is Hard – WSJ.