Prices are going up!

[beetlejuicex3]

As our supplier's 2011 price lists come out one thing is certain. Prices are going up. Some are keeping prices down for the first half of the year but say they will have to raise come summer, others are starting out 2011 with accross the board increases. Textile, raw materials and manufacturing costs are up 10-20%, apparently.


Same with groceries. My family notes that eggs which were $0.88 are now over $2.

Gas is already going up. CEO of one of the oil companies said $5 by the summer?


Doesn't there have to be demand for inflation to occur? I thought the economy was still sputtering. What happens when 20% increase in cost of goods meets 9% unemployment?

[BENESSE]

What happens when 20% increase in cost of goods meets 9% unemployment?

What happens is what always happens in challenging times.
People tighten their belt, learn to do with less or without, and the beat goes on until things improve. This isn't the first time, it won't be the last, and it could be considerably worse. Just look around the world.

[Winnie]

Yup, we've had an austerity budget and although it's going to hurt, I'd rather that than a bankrupt country. Since November the cost of living has risen by about 25%. Some food items have more than doubled. Hey ho! Lucky my middle name is Frugal!

[BENESSE]

Thing is, if you learn to live well below your means in good times, bad times will hardly affect you.

[Justin Case]

Gas is between 3.30 and 3.35 a gallon here in So Cal..

[hunter63]

Thing is, if you learn to live well below your means in good times, bad times will hardly affect you.

Well said, as my Grand parents, used to say, "We were so poor we didn't know it."

[Pocomoonskyeyes3]

Kind of ironic to me...with all the lay-offs and cut-backs, labor costs have gone down, yet prices keep increasing. Makes me wonder who is getting all that money. It sure isn't the workers. Where Dottie works they are talking about reducing the work force by 25% (more than what they already have) in the next few months.

[kyratshooter]

One of the things that happens when the gvt interferes with the free market is a condition called "stagflation". Demand is not up but the regulations/taxation imposed on business forces prices up while wages remain low. While the population cuts back on spending,buying less and demanding lower prices, the regulations keep the supplier from lowering prices.

We now have the same thing in state and local government. Federal regulations mandate certain spending and the locals can not cut back legally. They must either cut other survices or raise taxes to cover the mandated expense (often demands on the education system that have nothing to do with education. Environmental issues and demands on the HR department also).

$5 gas is expected due to an increase in gas tax ($0.50) and OPEC controlled price at the well head, not mfg profit. We were sitting on $3.25 for the past 2 weeks, in downtown Podunk, KY. It has to go up due to no one turning to Obamas' electric car. People will not pay the inflated cost of electric vehicles without $5 gas. they put so much R&D money into that vehicle it and its like can not be allowed to fail.

Welcome to Jimmy Carter's world. Some of us have seen this before. They didn't even wait for us to let the memory die. We have been warning of this since back in the '08 election. The only real difference is that the electric cars they are pushing are actually prettier that the ones they were pushing in '76.

[klickitat]

Kind of ironic to me...with all the lay-offs and cut-backs, labor costs have gone down, yet prices keep increasing. Makes me wonder who is getting all that money. It sure isn't the workers. Where Dottie works they are talking about reducing the work force by 25% (more than what they already have) in the next few months.

You are looking at this wrong. The cost of the product is the cost of the product to produce.

The lay offs are in direct relationship to the drop in demand for a product. So with a 25% cut in demand, a company will lay off 25% of it's work force, will buy 25% less raw materials, will ship 25% less and so on.

Where there is some profit in a down turn is in the fact that companies can easily lay off dead weight without the unions suing, they can end expansion projects that now show up as profits instead of loss and so on.

At first, everything looks really profitable as older accounts are being paid off and a companies expense sheet has been cut by 25%, but then look out for the consequences (also known as the double dip recession). Once all those alder accounts receivable get closer to being paid off, the tightening economy forces many to be late on payments or default altogether causing a chain reaction and THE second part of the slide which is always worse and deeper.

Remember our whole economy is based on borrow and spend. All these mid sized companies out there who employ the majority of people are in debt the moment they expand and almost always after they go over 10 employees. Everything is based on credit. The money they borrow from the bank to operate and the money they lone by allowing net 90 or even as it got towards the end net 180.

It's a house of cards my friends and it is all collapsing before our eyes. Those who say it isn't are either fools or liars.

[Rick]

Well, I'm not a liar so I guess I'm a fool.

[Rick]

GB - Price has little to do with the cost to produce. While production costs have to be factored in, the price of a product is more a function of marketing than cost.

Klick - I'm sorry but you're skimming along at too high of a level. It's a bit more complicated than that. And you can not assess percentages across the board in that manner. It's just doesn't work. Some of what you've posted is true while some is not.

[rwc1969]

History repeats itself, maybe one day we'll take a lesson in it and learn not to repeat the same old song and dance.

[crashdive123]

History repeats itself, maybe one day we'll take a lesson in it and learn not to repeat the same old song and dance.

It sure does. I had to take Mrs. Ratchet's history class four times.

[Alaskan Survivalist]

I do what I can. I keep enough gas on hand to last a while. This way the gas I use is at the price it was 3 months ago. I have downsized all vehicles and when it gets right down to it and I can no longer afford gas what I have on hand will power my chainsaw, rototiller, Zodiac and Honda generator a long time. I am thinking about getting a scooter or moped and only use my Chevy AVEO when I have to hual things.

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I looked into getting fuel tank but that would have added 4 dollars per gallon that would be recovered as prices increase and fuel is used and replaced but plastic cans only increase cost 2 dollars a gallon and cost would be returned twice as fast and being easier to fill I can hit sales and temporary dips in prices. I just do the math and try to make the best of it.

ADAPT!

[mosquitomountainman]

I do what I can. I keep enough gas on hand to last a while. This way the gas I use is at the price it was 3 months ago. I have downsized all vehicles and when it gets right down to it and I can no longer afford gas what I have on hand will power my chainsaw, rototiller, Zodiac and Honda generator a long time. I am thinking about getting a scooter or moped and only use my Chevy AVEO when I have to hual things.

Pretty much our plans as well. We're planning to take the motorcycle when we can't use bicycles and only use the pickup or Cherokee when nothing else will do.

[klickitat]

Rick, you are right that I did not go into detail and I did simplify things. At the end of the day it ALL boils down to cost per unit and how many units are in inventory, how many units are being ordered and a guess at how many will be sold tomorrow.


BTW Rick, if you are right at the end of the year I will buy you a good bottle of hooch and joyously eat a little humble pie.

[rwc1969]

It sure does. I had to take Mrs. Ratchet's history class four times.

I had to take American Government once and made darn sure to do real good just so I'd be sure to never ever have to take it again.

[crashdive123]

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[crimescene450]

doesnt gasoline go bad after a while? stored gas would only stay good for like a year or so.

[rwc1969]

I think a lot of what we're seeing in price hikes is simply people monopolizing on the situation. The items folks have to have to live are going sky high, while items that are not needed are dropping in price.

When the fuel first went up our boss added 15 dollar surcharge to all service orders. The average added cost was only a dollar or two at worst, and his fuel expense was a write off anyway because we never exceeded the max write off, so it really wasn't a cost at all, just a way to get 15 dollars more per service call that people would willingly accept because they'd been brainwashed by the national media into thinking gas prices are causing things to go up. When the fuel prices dropped he maintained the surcharge as have all other companies that followed suit.

With a little "creative accounting" most companies are actually increasing profits by this and other questionable methods. But, this will only go on for so long as we are learning. Eventually it will all come back and bite us in the ace.