As always, how hard it hits home will depend on your household income. There are a number of issues involved including the growing demand from China as well as traders looking for new sources of income. Businesses are in a touch spot because buyers are much more cautious due to the delicate economy. Many have held off increasing prices but that is likely to end as the year progresses. NY Times:
By the fall, people will most likely be paying more for each of them, as rising prices hit most consumer goods, say retailers, food companies and manufacturers of consumer products.NOTE FROM JOHN: I'll be curious what pressure this puts on the Fed to try to dampen inflation. Raising interest rates in this kind of economy could really hurt growth. But inflation isn't very welcome either. It will also be interesting to see what happens when prices rise. I don't know about you, but my income hasn't come back to pre-crisis levels, and people I know who lost their jobs haven't found new ones yet. It's not entirely clear that the price increase will bring in more money, or instead, cut back on demand significantly.
Cotton prices are near their highest level in more than a decade, after adjusting for inflation, and leather and polyester costs are jumping as well. Copper recently hit its highest level in about 40 years, and iron ore, used for steel, is fetching extremely high prices. Prices for corn, sugar, wheat, beef, pork and coffee are soaring. Labor overseas is becoming more expensive, meanwhile, and so are the utility bills to keep a factory running.
“There are cost pressures from virtually everywhere,” said Wesley R. Card, the chief executive of the Jones Group, whose brands include Nine West and Anne Klein. After trying to keep retail prices flat or even lower during the recession, Jones says prices for its brands will climb 15 to 20 percent by autumn.
