- The companies are pushing the higher raw material costs on their customers, the Federal Reserve said.
- Price increases are affecting restaurants, the auto industry and grocery stores, a report said on Wednesday.
- Prices could continue to rise in the coming months, the Federal Reserve said.
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Consumers could pay more and more for goods in the coming months due to the current shortage of labor and raw materials, according to a report by the
Price increases are already hitting restaurant meals, new and used vehicles and other products, the report said.
The report collected data from the United States. Bundesbanks across the country had seen general price increases, but the sectors that were hardest hit varied by location, the report said.
Construction and manufacturing companies paid more for raw materials, the report said: San Francisco companies in particular struggled when fuel and wood costs rose, for example. The reserve said higher freight, packaging and petrochemical costs hit a wide variety of industries.
In the Philadelphia area, around three-quarters of manufacturers said they would pay more for raw materials, while the Federal Reserve Bank of New York said companies in all sectors expected cost increases in the coming months.
In Philadelphia, many manufacturers said current labor shortages and supply chain disruptions are slowing their production.
In response, companies increased their selling prices, the report said.
More than a third of Philadelphia manufacturers said they are now charging more for their products, while the New York Federal Reserve said price increases were most pronounced in the manufacturing, retail, wholesale and transportation sectors.
“With a view to the future, the contacts expect cost increases and higher prices in the coming months,” says the report.
In Boston, the auto industry introduced moderate price increases to counter high demand and low inventory, while restaurant prices in Massachusetts rose “sharply” to offset increased labor and food costs.
According to the report, grocers and some restaurants in San Francisco raised prices while airline, rental car and lodging prices began to normalize after the slump during the pandemic.
However, some companies told the reserve that their focus was on cutting costs rather than increasing prices.
The report also states that as the economy reopens, consumer buying habits will change.
The Federal Reserve Bank of New York said the demand for luggage and formal wear “rebounded sharply” and sales of new and used vehicles rose well above pre-pandemic levels despite low inventory levels and global chip shortages.
The Kansas City Federal Reserve Bank, meanwhile, said sales for most retail, restaurant and auto businesses were above pre-pandemic levels.
And some St. Louis companies said they were struggling to keep up with growing demand. For manufacturers in Philadelphia, backlog, inventory and delivery times were at or near record levels in May, the report said.