Just as life shows signs of returning to normal after a year of upheaval due to the Covid-19 pandemic, Americans will feel the pain in their wallets as major companies announce price increases on a wide array of household goods.
Citing the pandemic, logistics costs and bad winter weather, the 3M Company on Tuesday was the latest to warn of coming price hikes on its full line of products ranging from Post-it Notes to bandages.
Cleaning and beauty supply giant Procter & Gamble has warned that Pampers diapers and its Always and Tampax feminine hygiene products will see prices rise 5% to 10% in the US as the company faces rising raw material costs.
And consumers are unlikely to find better deals by shopping around: Kimberly-Clark said it will increase prices for its Scott toilet paper and Huggies diapers.
The price surges are the result of a “combination of supply chain disruptions”, among other factors, economist Diane Swonk of Grant Thornton told AFP.
Factories shut down as the pandemic began, and restarting production is no simple task, she said.
“It’s easier to turn the lights out on a plant than to ramp it back up again, especially amid a pandemic where you have to do safety protocols and run workers’ shifts more spaced out,” Swonk added.
Consumers worldwide also stepped up ordering goods, many of which are made in Asia, creating bottlenecks in factories and ports. Ships then stayed at sea for longer periods of time, causing a global shortage of containers.
US Federal Reserve chair Jerome Powell has warned the constraints could last for a year, but also said price spikes are likely to be temporary.
The Labor Department reported wholesale inflation spiked to its highest yearly rate in nearly a decade last month, while the consumer price index rose 2.6% compared to its level in March 2020, when the pandemic began.
Analysts generally believe the increases are temporary as the global economy rebounds from the ravages of the pandemic, which have radiated far and wide.
Among products in short supply are semiconductors, a market already squeezed by the trade war between the US and China that saw additional stress when homebound consumers rushed to buy computers and gaming consoles.
The shortages have caused slowdowns in production of automobiles and consumer electronics.
Breakfast is set to get more expensive, as prices have risen for the popular Cheerios cereal, while food giant JM Smucker has raised prices on peanut butter since August.
“Inflation is very broad-based and it’s actually global,” Jeffrey Harmening, chairman and CEO of Cheerios maker General Mills, said during a recent earnings call.
The same is true on the other side of the Atlantic, where Mark Schneider, head of Swiss giant Nestle, spoke of “broad-based inflation across our various commodities, packaging materials and transportation costs”.
In addition to the market’s volatility, bad weather has blown through the economy, exacerbating the supply snarls.
The price of corn has risen more than 40% since the start of the year, reaching a level more than double where it was at the same time last year.
Brian Hoops of the brokerage firm Midwest Market Solutions said a drought in Brazil has hurt its corn crop, preventing it from meeting global demand.
“The door is wide open for the US to export a lot of corn into the world market, particularly to China where they’re trying to rebuild their hog inventory,” he told AFP.
But that means less corn for American consumers, driving up prices in the country, where cold weather has already delayed planting.