American Companies Are Raising Prices at a Brisk Pace
- Firms see more room to raise prices in souped-up economy
- Workers saddled with sluggish wage gains may lose out
President Donald Trump is giving many businesses an unexpected benefit on top of lower taxes and regulatory relief: He’s helping to restore their pricing power.
By pouring hundreds of billions of dollars of
tax cuts and extra government spending into an already stretched economy, Trump is fostering an environment where firms such as conglomerate 3M Co. can raise prices because demand for their products is strong.
“The power is with the seller,” said Chris Williamson, chief business economist at consultants IHS Markit Ltd.
That’s a turn-around from the past decade, when executives often bemoaned their inability to lift prices because of their fear of sacrificing sales. The shift will help them pad profits that are already
surging thanks to lower taxes.
It’s also good news for Federal Reserve Chairman Jerome Powell and his colleagues, who have struggled to lift inflation to their 2 percent target and hold it there. Policy makers took note of reports of a return of pricing power at their July 31-Aug. 1 meeting, according to the
minutes of that gathering released last week.
Some economists argue that rising prices come first, as companies seize opportunities to buttress their bottom lines when demand is strong. Workers then seek higher wages to make up for the purchasing power they’ve lost to rising inflation.
Data due Thursday are expected to show that inflation picked up in July. The personal consumption price index that the Fed targets probably rose 2.3 percent in July from a year earlier, the most in more than six years, according to the median estimate of economists surveyed by Bloomberg News.
https://www.bloomberg.com/news/arti...is-helping-companies-make-prices-higher-again
Inflation is heating up. The FED will hike interest rates in September.
