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What Happens To ‘Excuseflation’ When There’s No Excuse?
Lost in the euphoria around the slowdown in consumer price growth and apparently imminent producer price deflation in America was the downside of disinflation.
Well, it wasn't completely lost. At least one reader joked about Pepsi rushing to get one more price hike in before the music stops. But for the most part, it was all smiles as both CPI and PPI figures for the world's largest economy undershot expectations.
Once the sugar high wanes (if it wanes), market participants may remember that t
Is there a segmentation of who was able to raise prices well above cost inflation? ie. what’s the profit margin picture once you look at sectors and/or size?
Thanks for a great bit of synthesis. It’s pretty clear that simply calling out/shaming companies will have a limited impact on their pricing.
What you point out is that perhaps old-fashioned market forces will discourage more rapacious price hikes, albeit at a lag.
Poster Child #1 PepsiCo did mange to raise prices 15% in the second quarter, following up on the twin 16% hikes in the previous two quarters. CFO Hugh Johnson said the latest price hikes were merely following commodity prices higher.
As per your thesis, how will he justify more eyeball-gouging if it became widely known that commodity prices are actually falling? He did note, however, that lower income shoppers have been looking for better deals (WSJ 07/14/2023)