Inflation Pressure Now ‘Brutal’ Because of Supply Squeeze, US Companies Say

The shortage of the entire supply chain on which American companies depend is widespread. Inflationary pressure, A series of US companies revealed this week, forcing them to disrupt their businesses and raise customer prices.

Whirlpool on Friday accused “inefficiency of the entire supply chain” of “quite cruel” rises in prices of steel, resins and other materials, adding about $ 1 billion to consumer electronics makers this year. Said.

Albertsons CEO Vivek Sankaran said, “There is always no stock in the store,” citing the grocery chain’s efforts to meet the continuous challenge of the Whac-A-Mole game.

When asked about materials and equipment that Chipotle found difficult to secure this week, restaurant chain chief financial officer Jack Hartung replied, “all of them.”

Inflation is strong, with pressure on all links in the supply chain spreading across sectors, from factory closures caused by the Covid-19 outbreak to struggling to find enough staff to unload trucks. There are growing questions about the threat to consumer spending and the recovery of corporate profits.

Recently, all of the largest airlines in the United States have been dissatisfied with the soaring jet fuel prices, toy maker Matel has clarified the challenge of rising resin prices, and Danaher has a list of manufacturers struggling to procure electronic components. Joined in.

On Wednesday, a beige book summary of the Federal Reserve’s economic situation reported that supply chain bottlenecks and labor shortages slowed economic growth in many countries. “Most districts have reported significant price increases, boosted by rising demand for commodities and raw materials,” he said.

Overwhelming harbors, truck driver shortages, and record low warehouse vacancy rates collide with strong demand from consumers and corporate customers, causing “quiet turmoil”, non-profit working with manufacturers Ethan Carp, CEO of consultancy firm Magnet, said.

“They’re busier than ever, but they can’t find people to ship what they’ve already produced,” he said. He added that the company was suffering from unpredictable delays and was paying the odds for supplies found in the gray market. .. .. The port will be backed up and the order will continue. “

Most companies have said they have succeeded in offsetting these high costs by raising their prices or finding efficiency elsewhere.

Procter & Gamble, a maker of tide detergent and charmin toilet paper, said it would embark on its next price increase this week after warning that supply chain costs would be higher than previously expected. Andre Schulten, Chief Financial Officer of P & G, said it has announced price increases for nine of its ten categories of products in the United States, and has announced mid-single-digit price increases for most of its portfolio.

Earlier this month, PepsiCo said price increases could continue into the first quarter of next year, and Tesla said it was adjusting prices to compensate for rising commodity and labor costs.

Management plans to continue to increase cost pressure until 2022, but is wary of raising prices too high if inflation turns out to be short-lived. “I don’t think inflation will go away in the next one, two or three quarters,” Hartung said, adding that even if commodity prices fall, wage inflation is unlikely to be temporary.

“We know we have pricing power,” he said, but he added.

VF Corp CFO Matt Puckett said the company has curtailed price cuts on Vans sneakers and the North Face jacket to increase margins, despite factory closures in Asia and port congestion in the United States.

“As time goes on, I think [inflation] It will start to ease a bit, but we plan to see a significant increase in cargo in the future. ”

United Airlines Chief Commercial Officer Andrew Nosera reiterated the message on Wednesday, meaning that congestion at U.S. ports was “today’s air transport, never before” in 2022. I expect it to continue until.