Retail sales indicate rising inflation not rising consumption

[medved]

Re: Retail sales indicate rising inflation not rising consumption

Thanks. This will be the new format for the new site when it's launched next week. Short, concise daily updates and long, detailed bi-monthly analysis in the Select area along with any changes to the TPCE Portfolio positions with comments on them.

I think, this is a very good idea.

[Slimprofits]

Re: Retail sales indicate rising inflation not rising consumption

I've been working as a vendor in the retail world and this is the earliest Christmas roll out yet.

At Home Depot yesterday, I watched as they setup Christmas decorations (everything is made in China), snowblowers and the like. Meanwhile it's 9/20, 70+ degrees outside and most people don't even have their Halloween crap up on the houses yet.

When does the third quarter end for these companies? Is this a push for more 3Q revenue?

[doom&gloom]

Re: Retail sales indicate rising inflation not rising consumption

End of September Christmas rollout?! I predict there are gonna be LOTS of "sales" early on competing for htose dollars.

[cjppjc]

Re: Retail sales indicate rising inflation not rising consumption

I've been working as a vendor in the retail world and this is the earliest Christmas roll out yet.

At Home Depot yesterday, I watched as they setup Christmas decorations (everything is made in China), snowblowers and the like. Meanwhile it's 9/20, 70+ degrees outside and most people don't even have their Halloween crap up on the houses yet.

When does the third quarter end for these companies? Is this a push for more 3Q revenue?

Yes I see it too. It's not even that close to halloween. At my store with the extra inventory comming in so early, it feels like desperation.

[Slimprofits]

Re: Retail sales indicate rising inflation not rising consumption

Everything Home Depot does is regional or national. Even the time that the lights turn on in the stores is set by Atlanta.

So on Monday, probably across the Northeast and perhaps the midwest, it was Christmas rollout day.

Maybe the stores in the South and the West get it in two weeks.

They're also complaining because revenues are down compared to last summer.

[seanm123]

Re: Retail sales indicate rising inflation not rising consumption

Emergency Christmas!

http://www.thedailyshow.com/watch/th...ng-the-economy

[mmr]

Re: Retail sales indicate rising inflation not rising consumption

Yet more evidence that cost-push inflation is visibly beginning to hit consumers (or is about to) right on schedule in Q4 2010.

Also interesting to see the writer spinning a decline in consumers' purchasing power and standard of living as a positive event - I suppose it could be positive for corporate profit margins, at least briefly until demand falls off again.

Gingerly, Retailers Try to Pass Along Higher Costs

Companies that sell consumer mainstays from beer to dresses, from steaks to tires, are rolling out price increases in a collective test of America's economic strength.

Coffee retailer Starbucks Corp., clothing firm Jones Apparel Group Inc., and Goodyear Tire & Rubber Co. are among the many companies wrestling with higher raw-materials costs and looking to pass along some of those costs to customers.

The ability of companies to sustain such price increases may sway how the Federal Reserve views the health of the economy, and potentially figure in its decision on whether another big round of stimulus is needed. The country's low rate of inflation was cited by the Fed last month as a main reason the central bank is considering further steps to juice the economy.

On Friday, the Commerce Department said the "core" personal-consumption expenditures index, which excludes volatile food and energy prices, increased 0.1% in August, the same rate as July. The index is up 1.4% year-over-year, below the Fed's preferred range of inflation.

"Everyone's talking about raising prices," said Manny Chirico, chief executive of Phillips-Van Heusen Corp., whose clothing labels include Calvin Klein and Tommy Hilfiger. Mr. Chirico says costs are up 5% to 7%, and he hopes to recoup some of that by increasing prices 3% to 4% starting late this year.

For now, doubts about the strength of the recovery linger. Reports on Friday showed the economy has largely stalled.

If consumers are willing to pay more, it could indicate the economy is turning a corner, but also serve as a warning that inflation could spiral. If consumers balk at higher prices, though, it would represent a setback and could pinch corporate profits. Some companies could be forced to backtrack with discounts if sales falter.

"There's always this give-and-take, this testing-the-waters on price," said Michael Moran, chief economist at Daiwa Capital Markets. "I would expect the inflation rate to stay in the low range that we've seen recently."

Mr. Moran cited persistently high unemployment and low wage growth, both of which limit consumers' appetite for higher-priced goods.

Companies nonetheless say some labor costs are rising, particularly for overseas manufacturing, and point to rising commodities prices. Commodities typically make up less of a company's costs, but prices have risen sharply, with cotton up 38% this year, coffee up 33% and rubber up 17%.

Some top executives say a touch of broader inflation could ease the pressure, echoing the Fed's statement last month that current levels are lower than it considers necessary "to promote maximum employment and price stability."

"It will give us some breathing room as retailers and wholesalers because this last three or four years was constant price, price, price," Wesley Card, chief executive of Jones Apparel, told investors at a conference last month. "I think some inflation actually could help." The firm is planning increases that could affect consumers next year.

Many economists have argued that moderate inflation spurs consumers to spend and companies to invest, and adds to a general sense of economic well-being. Robert Shiller, a Yale economics professor who has studied attitudes about inflation, pegged the feel-good rate at about 2% to 3%, above the current rate. "The sense that we're living in a normal world is enhanced by inflation in that range," Mr. Shiller said. But the risk in trying to move up to that range is that inflation is hard to control. "It's like having one drink," he said.

Some firms successfully increased prices earlier in the year, with little or no discernible impact on inflation. The 6% increase that Goodyear began rolling out for consumer tires on Friday follows on another 6% rise in June, which contributed to an increase in second quarter North American sales revenue, as sales volume also rose. The firm cited higher raw-material costs.

But many other firms held off on charging more even though the recession technically ended more than a year ago, because they were concerned about a consumer backlash and losing sales to rivals.

Nonetheless, some have concluded the moment is ripe. "This is a time to test your pricing power rather than assuming, as you may have a year ago, that you had little or no pricing power," said Frank Luby, a partner at consultancy Simon-Kucher & Partners who works with consumer packaged-goods firms.

Anheuser-Busch Inc., a division of Anheuser-Busch InBev NV, is charging more for Budweiser and other beers in certain parts of the U.S. It didn't disclose the size of the increases, but said they will help close what it calls a "gap" between its prices and the consumer-price index.

"Beer, relative to the CPI, is more affordable today than many other beverages," the company said in a statement, adding that its wholesalers "make their own independent pricing decisions."

Raising prices has already paid off for some firms. Morton's Restaurant Group Inc., which operates dozens of steakhouses in the U.S., boosted prices 1% in June and another 1% in July. The wholesale price of beef has risen 13% this year, according to U.S. Department of Agriculture data.

There have been no complaints from customers, nor has there been a fall off in foot traffic, said Ronald DiNella, the Chicago-based firm's chief financial officer.
Mr. DiNella didn't rule out other increases, "if we see further inflation in our food costs next year."

Still, some companies are dipping their toes in the water daintily, targeting specific products. Starbucks, for instance, said on Sept. 22 that it is raising prices on "labor-intensive and larger-sized beverages," but maintaining or lowering the price of a regular cup of coffee in most markets. It is making the changes this month in several parts of the U.S.

Companies are also examining competitors closely. Peet's Coffee & Tea Inc., a Starbucks rival, announced its own price increase five days later.

[jk]

Re: Retail sales indicate rising inflation not rising consumption

from an askfleck reader: following are some interesting numbers that I would imagine will flow through directly to consumers in the coming year:

Commodity Price.....................% Increases (Year over Year)

Agricultural Raw Materials..........24%
Industrial Inputs Index..............25%

Metals Price Index....................26%
Iron Ore................................103%

Hides.....................................25%
Rubber...................................62%

Coffee...................................45%
Barley....................................32%
Oranges.................................35%
Beef......................................23%
Pork......................................68%
Salmon..................................30%
Sugar....................................24%
Palm Oil.................................26%

Wool.....................................20%
Cotton...................................40%

jk- to which i will add

crude oil...............................16%
gold.....................................32%
silver....................................35%
s&p 500 index.........................12%

if this is deflation, i'd hate to see what inflation looks like.

[Slimprofits]

Re: Retail sales indicate rising inflation not rising consumption

I've been working as a vendor in the retail world and this is the earliest Christmas roll out yet.

At Home Depot yesterday, I watched as they setup Christmas decorations (everything is made in China), snowblowers and the like. Meanwhile it's 9/20, 70+ degrees outside and most people don't even have their Halloween crap up on the houses yet.

When does the third quarter end for these companies? Is this a push for more 3Q revenue?

Stores Push Black Friday Into October

By STEPHANIE CLIFFORD

Published: October 28, 2010

The year’s most popular discount shopping event, referring to the Friday after Thanksgiving, is arriving ahead of Halloween this year, with some promotions beginning this week and others throughout November.