Friday, October 22, 2010

Indication Inflation at the Consumer Level is Coming

There's already plenty of inflation at the basic commodity level. Commodity prices have been soaring across the board. Now comes the first indication that price inflation is starting to creep into the consumer level.

Nestle SA, the world’s largest food company, reported nine-month sales growth of 6.1%. The company said that 1.6 percentage points of the increase came because of prices they raised.

The price increases are not likely to end at 1.6%. The pressures for Nestle are continuing.

“Although we see input cost pressures picking up, we expect Nestle to be able to pass on these higher costs in most regions and in most categories,” Marco Gulpers, an analyst at ING Wholesale Banking, said.

This is just anecdotal evidence, but Nestle is a broad-based consumer company, so price pressures at the firm need to be taken into account when trying to understand price trends.

1 comment:

  1. Wenzel,

    Oh no, not you too? "inflation at the basic commodity level"?

    Excuse me, have all Austrians lost it? First the Misesiods get sloppy with inflation semantics, now, the Great Wenzel?

    Come ON guy! Inflation and deflation are changes in the total supply of money, not changes in prices.