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We're getting pinched, slowly but surely

Those nickels and dimes add up. As every product in our daily lives costs just a little bit more, the big picture looks gloomier.

By ASSOCIATED PRESS
Published September 7, 2006

HIGHER PRICES

Some examples of companies that have said this summer they are raising product prices, and why:

Black & Decker Corp.: Maker of power tools and accessories plans price increases later this year, responding to accelerating commodity costs.

Kimberly Clark Corp.: Raised prices on toilet tissue and paper towels by 6 to 7 percent earlier this year and is increasing facial tissue and feminine care products prices, citing higher costs for energy and raw materials.

Southwest Airlines Co.: Raised some fares, including $10 on one-way flights of more than 1,000 miles, because of high fuel prices. Several competitors matched the increases.

Fuji Photo Film USA Inc.: Increasing prices on color paper products and photographic chemicals, citing high costs of raw materials including silver and oil.

Franklin Electric Co.: Maker of electric motors, drives and controls for use by original equipment manufacturers, raising prices for many of its products in the third quarter, after raw material cost increases, mostly in copper.

HNI Corp.: Office furniture maker raising prices, blaming "a dramatic broad-based increase in material costs."

CINCINNATI - While prices at the gas pumps get a lot of attention, other increases are pulling at Americans' pocketbooks from a variety of directions.

"We see it daily as far as everything we need for the kids; groceries, the little one still in diapers; anything that has to do with the house," said Mary Ann Ray, 32, a registered nurse and mother of two in suburban Union Township just east of Cincinnati.

Besides spending $10 to $15 more to fill up her minivan than she did a year not so long ago, she ticks off a litany of other higher prices squeezing the once-comfortable household budget of her and her husband, the product development director for an educational software company. They include over-the-counter drugs, delivery pizzas, baby formula.

The ripple effect into the everyday economy as big companies try to offset increased costs for energy, transportation and raw materials is a creeping inflation that economists are watching, as the Federal Reserve balances inflation concerns against a slowing economy. While recent economic data indicated that inflation pressures are easing, consumer surveys show inflation worries are contributing to declining confidence about the economy.

And more price increases are coming.

In summer earnings reports, company after company has reported plans to pass along some of their higher costs in pricing of some or most of their products, from Energizer Holdings Inc.'s batteries to Eastman Kodak Co. film; Whirlpool Corp. appliances to Clorox Co. household cleaners; Anheuser-Busch Cos. Inc. beer to meals in some Buffalo Wild Wings Inc. restaurants.

The federal Labor Department reported a July core consumer inflation increase of 0.2 percent, the lowest in five months. But core inflation, which excludes energy and food, has risen by 2.7 percent over the past 12 months.

Jay McIntosh, Chicago-based Americas director for retail and consumer products for Ernst & Young, said that while the costs of gasoline, health care, college tuition and other areas have been rising steadily for years, some everyday items are climbing now, too.

"I think consumers are feeling it a little more day to day," McIntosh said. He said that large companies that have kept prices down by cutting back internally or increasing productivity are facing increasing pressure because of spiraling energy and commodity prices fueled partly by growing consumption by China.

"It seems like right now, it's a little bit more difficult to keep from raising prices," McIntosh said.

James Brock, an economics professor at Miami University in Ohio, said "the $64,000 question" is how much longer companies can keep rising costs from spilling heavily into the consumer marketplace.

"This has been somewhat of a mystery so far, and something (policymakers) are struggling with," Brock said. "The question is when does that really start to show up at the retail level and the cash register. Big companies like Procter & Gamble can make modifications in the ways they do things to keep the lid on prices. Honestly, I've been surprised that it hasn't shown up more than it has."

[Last modified September 6, 2006, 21:15:05]