If the great magician Harry Houdini were alive today, the one thing he could never escape from would be inflation. It affects the rich and the poor — though of course to varying degrees. Over the past few months, every third story in the business press seems to have been about how well consumers are weathering high prices. So far, they have done it pretty well considering the huge spike in gasoline caused by the instability in the Middle East. The fact that consumers have persevered is remarkable considering how much the prices for so many things have gone up in such a short time.
Clothing makers such as Hanesbrands were forced to raise prices this year after cotton prices reached highs not seen since the administration of Ulysses S. Grant. This phenomenon is even pushing up the costs of producing a dollar bill, ironically enough. Earlier this year, McDonald’s Corp said it would raise prices on selected menu items because of rising costs for agricultural commodities. This applies to every aspect of the meal. Prices for winter wheat are soaring because of bad weather in certain parts of the country and export controls. Prices for red meat may rise 7% to 8% this year, ensuring that the Quarter Pounder With Cheese pressures the bottom line of McDonald’s along with the waistlines of its customers.
Yes, even the humble French fry is not immune to the power of inflation. A carton of Idaho russets recently sold for $22.24, up from $9-$10 last year. The Packer newspaper reports that prices may climb even higher. The coffee? Prices for the beans needed to produce the caffeinated beverage may rise as much as 40%, according to Bloomberg News. Kraft Foods and JM Smucker have already raised prices. The chocolate chips in McDonald’s cookies? Prices for chocolate have soared recently because of instability in the Ivory Coast, the largest cocoa producer. Hershey Co. announced a 9.7% increase in wholesale prices in March.