Why Americans Are Paying More For Everything.

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  • It's not just you, Everything really is getting more expensive,Americans want to buy more stuff, and businesses are rushing to meet demand.

    Both consumers and producers are feeling the squeeze from a healthy US economy. After years of low inflation, prices rose 1.9% in March from a year ago, according to the Federal Reserve's favored inflation measuring stick.

    Consumer prices were up 2.1% in April from a year ago, while suppliers paid 2.6% more.

    Auto loans are getting more expensive because the Federal Reserve is gradually raising interest rates. The 30-year fixed-rate mortgage has moved to a seven-year high above 4.6%, according to Freddie Mac.

    Dozens of companies in recent weeks have said they already hiked prices or plan to in the coming months to combat inflation.

    McDonald's (MCD) and Chipotle (CMG) have raised burger and burrito prices. Amazon is increasing prime members by 20 percent. Netflix made monthly subscription prices 10 percent higher late last year.

    Tyson Foods (TSN) is planning to make Ball Park hot dogs more expensive, while Stanley Black & Decker (SWH) will hike the prices of their industrial tools.

    "We're in business to make money, and in order to do that, we have to achieve price increases to offset some of that inflation," Stanley Black & Decker's CEO said last month. Americans are experiencing it at the pump: A gallon of gas is $2.91 — 24% higher than a year ago.

    Higher oil prices will also eat into companies' margins, which could lead them to pass off the costs to consumers.paint,chemical consumer products to produce and package their goods. Airlines, trucking, and railroad firms need fuel for transportation.

    Oil is American Airlines' (AAL) second largest expense, making air travel costlier for the company. That will trickle down to customers: "I would expect you would see higher fares," American's CEO said last month.

    Freight costs are climbing. There aren't enough truck drivers right now to haul all the products manufacturers are churning out around the country. That has sent shipping costs soaring.

    "Any company whose product ends up on a truck is going to feel it big time," said Peter Boockvar, chief investment officer at Bleakley Advisory Group. "If anyone is going to be affected by rising freight costs, it's going to be Amazon. Raising Prime is a way of offsetting that."

    Steel and aluminum prices are also going up, a concern for consumers. Campbell Soup (CPB)said on Friday that it expected double-digit increases in the two.



Source : IWN Online Editor

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