P&G, Nestle, Verizon, etc.
Continuous Price Increases on Razors, Coffee, etc.
to Offset Rapidly Rising Costs
Tesla Model X Price Raised by $5,000
[Asia Economy New York=Special Correspondent Baek Jong-min, Reporter Jo Yoo-jin] American companies are consecutively raising prices, citing supply chain issues and rising costs. Although Janet Yellen, U.S. Treasury Secretary, forecasted that inflation would drop to the 2% range in the second half of next year, the actions of companies suggest that inflation will not disappear easily.
On the 24th (local time), the Wall Street Journal (WSJ) reported that U.S. companies such as P&G, Nestl?, Chipotle, and Verizon will continue to raise prices next year to offset rapidly increasing costs amid supply chain disruptions. This means that popular American products like Gillette razors, Nestl? coffee, Chipotle’s Mexican food burritos, and mobile phone fees are expected to rise one after another in the coming months.
Tesla, led by Elon Musk, also announced price increases of $5,000 each for its major models, the ‘Model X Long Range’ and ‘Model S Long Range,’ raising their prices to $104,990 and $94,990 respectively. The ‘Model Y Long Range’ and ‘Model 3 Standard Range Plus’ were increased by $2,000 each, to $56,990 and $43,990 respectively.
WSJ reported that companies believe consumer resistance to price hikes will be low. Since the COVID-19 pandemic, household savings have increased due to expanded government support, and wages have risen. This is why companies expect consumers to continue spending despite price increases. Ben Reich, CEO of Data Assembly, said, "Despite the recent series of very shocking price increases, consumers have absorbed the high prices without a decrease in demand."
However, some experts offer opposing views. Nick Modi, an analyst at RBC Capital Markets, said, "As the effects of disaster relief payments fade and people start paying rent properly, inflation is expected to become a bigger problem."
Despite accelerating inflation due to rising oil and food prices, Secretary Yellen forecasted that inflation would fall to the 2% range in the second half of next year. The consumer price index in September rose by 5.4% compared to a year ago.
On the same day, Secretary Yellen appeared on CNN and stated that the recent sharp rise in inflation is disappearing, refuting point by point the claim by former Treasury Secretary Larry Summers that the U.S. government and the Federal Reserve (Fed) might lose control over inflation.
Secretary Yellen said, "I agree that we are experiencing higher inflation than the U.S. has seen for a long time, and this is certainly concerning," but added, "I believe he is wrong. I do not think we will lose control over inflation."
Meanwhile, when asked what opinion she gave President Joe Biden regarding the reappointment of Fed Chair Jerome Powell, Secretary Yellen did not answer directly but said, "During the terms of Bernanke, myself, and Powell, regulations on financial institutions have been significantly strengthened."
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