I just got an e-mail from a supplier of products I use to warn of significant price increases. I’m afraid that this won’t be the last notice before the Fed’s “transitory inflation” stops. This is the meat of the letter. I’ve bolded the portions that I consider most significant.
Most of our products will see an increase of 8-12%. However, there may be a few outliers that fall outside of this range. There are a handful of input cost increases in particular that have driven the need for a price increase at this time:
- Obviously, [our products] are made of steel, which has always been our highest cost. In many cases, our steel costs have increased more than 30% this year alone. An increase of this magnitude has never been seen in the industry.
- Our second-highest cost is labor. Businesses across the country are struggling to attract and retain employees. The war for talent has never been more fierce. Naturally, this has led to higher wages.
- Aside from steel and labor, our other input costs have continued to rise at historic rates as well. This includes the cost of coolant, safety supplies, abrasives, and other necessary items. In fact, the cost of our corrugated packaging supplies has doubled in the last 18 months.
Again, we would like to stress that the magnitude of these cost increases has never been seen in our 75-year history.
I realize that getting a price increase notification is never pleasant. However, I do want to emphasize that [redacted company] is not using this as an opportunity to increase our profit margin. The reality of the situation is that [redacted company] is absorbing more of these input cost increases than we are passing along.
Imagine getting this letter … knowing that you’ll have to pass the costs to your customers. You may understand the reasons behind these cost increases, but your business will suffer somewhat regardless. Only the Fed wants inflation.
Grover