We’ve recently reported on how food inflation continues to plague the U.S. But a recent New York Times article suggests that some companies continue to increase prices even though their own inflation driven-driven costs have been covered. A result is that the companies are heading to the bank to the chagrin of struggling customers.
Food companies and restaurants have been raising prices over the course of the past few years. They have done so in the amidst of wage increases and the growing costs of raw ingredients. The companies were essentially passing along expenses to customers.
But according to the Times article:
“[A]mid growing concerns that the economy could be headed for a recession, some food companies and restaurants are continuing to raise prices even if their own inflation-driven costs have been covered. Critics say the moves are all about increasing profits, not covering expenses. Coca-Cola, PepsiCo and Chipotle did not respond to requests for comment.”
The article goes on to state that there are plenty of shoppers, including those with lower incomes and retirees, that have changed their shopping routines. But the article goes on to say that a company like Coca-Cola recently remarked that “customers continue to buy the company’s products despite economic challenges.” Further, the Times piece did not provide any concrete data that shows consumers are refusing to buy certain products in reaction to soaring prices.
It is interesting to learn that some companies are increasing their profit margins with the rising costs of wages and raw materials. We’ve seen an almost opposite scenario with the manufacturers of goods we work with and have spoken to. These businesses have experienced rising costs of fuel, ingredients, labor, and materials for the past several years. But they have not been able to raise their prices during this same period, and they have been losing margin over the past few years.
We should note that experts agree that the real inflation rates are under-reported by the government. Experts state that prices have increased by double digits in most sectors including fuel, wages, and of course food (groceries and restaurants).
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