Domestic Policy

The Costs of Living Are Rising


People are going to start to feel the pain of increased expenses in various ways. But before, experts were warning about it in general terms, now they are warning about it in specific terms. For instance, a recent report notes that Procter & Gamble will increase their prices on essential items for young families. 

Brands that people know and love like Pampers and Tampax will start to cost more in September. But it is not just Procter and Gamble that will raise their prices.

Kimberly-Clark also noted earlier in 2021,that the firm will raise their prices on products like toilet paper and other essential household elements.

But why are these brands working on these moves to increase prices?

They attribute these increases to commodity cost inflation.

Commodity Costs Are Increasing

Brands that provide cereal products, and other breakfast or lunch and dinner items have also noted that they are noticing the need to increase prices. These firms talk about supply chain issues, shipping costs, and higher demand as the need to increase prices.

Reports of lumber, corn, and other commodities rising have been a contributor to these price increases that one may see in their local supermarket. 

At the same time, these commodity price increases coupled with supply chain issues and increased demand makes it to where something has to give.

Firms Are Responding To Various Market and Cost Factors In  Specific Ways

Firms are looking at ways to account for supply chain issues, demand growth, and commodity price increases by adjusting the cost of their goods. Prior to the pandemic, various companies would adjust their margins when it came to higher costs from suppliers. But after the pandemic, the paradigm is a bit different.

Various corporations do not have to adjust as they did in the past due to competition. At the current moment, there is significant demand for a variety of goods due to aspects like stimulus programs, low rates, and supply shocks.

The pandemic would bring about disruption at a large scale that would lead to low supply and high demand. While a few of these problems were solved, many of these issues remain as firms grapple with the new reality.

Different responses by consumers due to the pandemic will also factor into the equation. For instance, consumers may not have desired exercise equipment and furniture en masse in the past. But as consumers had to stay home and do everything there, they decided to shift their demands.

You can imagine the need for firms in China and other places to create new capacity to meet these new demands, They would also have to coordinate with shipping firms on containers and other elements to manufacture and distribute these goods to the destination. But shortages that range from containers to other aspects have affected supply chains, increasing prices of the movement of goods as well.

Howard Roark

Here to talk sense. Tips, emails, questions? Reach out at hroark@sentryhill.org

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