Rising Crude Oil Pushes Consumer Prices Higher

Monday, November 12, 2007 | 09:00 AM

I'm not sure what to make of the Core-heads -- that motley collection of blinker-eyed ostriches who either claim there is not much in the way of inflation, or refuses to acknowledge the impact Oil prices has on everything else we consume. Despite all of the obvious price data and anecdotal evidence to the contrary, they insist there is little or no inflation.

Policy makers who believe this tripe are making a serious mistake. Why> Because of what Oil is used for:
In the US, only half of the Crude Oil we consume is for gasoline and other energy products. Petroleum makes its way into many, many other manufactured goods.

Apparently, the Core-heads must not ever go shopping. Despite the absurdity of looking at near $100 Oil and claiming there is no inflation, it appears they don't look at MANY other prices either.

To wit, this discussion on the push through impact of Crude prices on the costs of so many other consumer goods:

"Let the consumer beware: Costs are going up on almost everything the average American family consumes.

Blame it on crude oil.

The rocketing price of crude oil is not only sharply hiking the costs of fueling the car and heating the home, but is bidding up prices on the raw materials that go into goods from produce to perfume.   

At the same time, the push to develop ethanol as an alternative fuel through corn and similar products is inflating the cost of feed for cows, pigs and other farm animals - and that also increases the prices consumers pay.

What specific products are impacted by Oil prices? Well, anything that gets shipped -- which includes pretty much everything.

•  Wrigley (WWY) raised prices 10% in the second and third quarters on its popular gums and candies.

• Hershey Co. (HSY) On an earnings call last month, the COO said it may very well jack prices again in January when there's a "better view of the commodities situation."

• Kraft Foods Inc. (KFT) CEO told investors they had to raise prices to cover "input costs" of raw materials for food as well as resins for containers and Wax for packaging frozen foods.

• Procter & Gamble (PG) lifted its prices on Coffee by 8%, on fabric softeners  by 9%. The CFO said more price hikes are coming:

- 5% - 12% increase on personal cleansing products in January;
- 5.5% rise on paper products in February;
- 5% - 9% on disposable diapers
- 3% to 5% on blades and razors in February.

• Starbucks Corp. (SBUX) boost prices by 9 cents per beverage (to cover milk price rises), and then another 5 cents (rising costs of labor and energy).

• Colgate (CL) will raise prices on pet foodin Q4 by 6% - 8%.

• General Mills (GIS) has raised prices on some, while shrinking the size of others.  The CEO said "We are actively monitoring the need to pass along additional input cost pressures as they arise."

• Cooper Tire & Rubber (CTB) raised tire prices 5% in June, and another 4% in October; Bridgestone, Firestone, Fuzion and other tire lines also raised their prices by about 5%.


I am not saying everyone who emphasizes the Core to the detriment of true inflation is both a liar and an idiot -- but if you were just pick one one of those monikers, you won't be too far off . . .


Oil's long tail
Jennifer Waters
MarketWatch, 8:17 PM ET Nov 9, 2007       

Monday, November 12, 2007 | 09:00 AM | Permalink | Comments (33) | TrackBack (0)
de.li.cious add to de.li.cious | digg digg this! | technorati add to technorati | email email this post



TrackBack URL for this entry:

Listed below are links to weblogs that reference Rising Crude Oil Pushes Consumer Prices Higher:




Posted by: michael schumacher | Nov 12, 2007 9:04:04 AM

The comments to this entry are closed.

Recent Posts

December 2008
Sun Mon Tue Wed Thu Fri Sat
  1 2 3 4 5 6
7 8 9 10 11 12 13
14 15 16 17 18 19 20
21 22 23 24 25 26 27
28 29 30 31      


Complete Archives List



Category Cloud

On the Nightstand

On the Nightstand

 Subscribe in a reader

Get The Big Picture!
Enter your email address:

Read our privacy policy

Essays & Effluvia

The Apprenticed Investor

Apprenticed Investor

About Me

About Me
email me

Favorite Posts

Tools and Feeds

AddThis Social Bookmark Button

Add to Google Reader or Homepage

Subscribe to The Big Picture

Powered by FeedBurner

Add to Technorati Favorites


My Wishlist

Worth Perusing

Worth Perusing

mp3s Spinning

MP3s Spinning

My Photo



Odds & Ends

Site by Moxie Design Studios™