US companies plan to increase prices

In a period where rising raw-material costs and oil prices are denting profits, a recent poll indicates that most US companies are looking to redress their balance sheets by reducing hiring and increasing prices.

The National Association for Business Economics indicated that nearly four times as many businesses plan to increase prices and pass their ever increasing overheads to their customers, rather than reducing their prices. Just 9 percent of employers said they would increase payrolls over the next six months.

At the forefront of this change are US food companies, they are preparing to introduce large price increases as soaring commodity costs means that their margins have been severely cut back.

Sara Lee the maker of meat products such as Jimmy Dean sausages, the market leader in meat lines, said that they are forced to increase prices by up to 20 percent this year to remain profitable.

Kraft Foods, Kellogg’s, ConAgra and Tyson are also implementing prices increases, although higher food prices on such a wide scale is going to increase inflationary pressures during a period where consumer spending is being cut back and Americans are having to cut back due to increased fuel prices and mortgage costs.

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