Shop Talk

Retailers, consumers and prices

Check Out Line: Looks like inflation worth whining about

July 16, 2008

gas.jpgCheck out how much stuff costs.
Consumer prices rose 1.1 percent in June, the biggest monthly increase in 26 years. The culprits are the same as we have seen for months: energy prices rose 6.6 percent from May, with food up 0.8 percent.
Overall, prices were up 5 percent from a year ago. And not to whine about it, but it looks like more price hikes could be on the way, as food and consumer products companies continue to grapple with rising energy and commodity costs.
The news puts the Fed in a bind, economists said. Rising inflation means the Fed isn’t likely to be able to cut rates anymore, which means help for shoppers in the form of lower interest rates. But with the economy still weak, the Fed also may not be able to raise rates to tame inflation, which means prices could continue to soar and further pressure consumers.
“We have to get used to the idea of 5 percent (annual) headline inflation,” Alan Ruskin, chief international strategist at RBS Greenwich, said.
Also in the basket:
P&G Global marketing chief Stengel to step down (Ad Age, WWD, WSJ (subscription required for the last two) )
Quick hook at Halston: Creative Chief Zanini said to be out at label (WWD)

Furniture Brands speeds up cost cuts, warns on ’08

(Reuters photo)

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