Big reports this week point to more inflation stories

By Flickr user U.S. Army Corps of Engineers

With gasoline prices back in headlines and two big inflation reports due out later in the week, you might want to consider another look at inflation and consumer prices this week.

On Thursday, the federal Bureau of Labor Statistics will release the monthly Producer Price Index reflecting March wholesale costs; last month’s report about the February PPI showed  a 1.6 percent gain in that month alone, driven (as usual) by higher food and fuel costs.

With the national average gallon-of-gas price up 22 cents from a month ago, to $3.77 on Monday according to AAA’s Fuel Gauge Report, the upward trend of the PPI is likely to continue, slimming profits for businesses while boosting prices on a variety of goods and services for shoppers.  Stories (or a Q&A or other alternative presentation) detailing the cost concerns of businesses in your area — and how they factor those costs into their pricing formulas and business practices – are bound to be of interest.

For example, I used an airport car service the other day and the cost was $3 higher than it was a few months ago.  The driver – who has to pay for the fuel consumed by the car he’s issued each day – said the big Town Cars were becoming a liability and that no drivers wanted to pilot the large luxury SUVs used for group pickups because the poor fuel mileage negated all driver profits with gas approaching $4 a gallon.   Slurping up $4 every 12 miles, an SUV can cost $20 to make a 60-mile airport pickup or delivery (not an uncommon distance due to our area’s suburban sprawl) – eating the driver’s share of the $58 fare.

This Progressive Grocer trade journal article published after the February PPI release claims that so far, supermarkets and other food retailers have been loathe to pass along price spikes to consumers.  That would seem to contradict consumer outcry about food price costs, as well as the Consumer Price Index reports of recent months showing gains in a number of categories.  Still, the question of how stores share the pain of wholesale price jumps is interesting.  This Brenham (Texas) Banner-Post article, “Businesses walk a fine line in cost increases,” is a sort of walk-down-Main-Street take on the problem and is rich with nitty-gritty detail, like a restaurant owner grappling with flour costs that  have doubled from $7.50 to $15.88 a 50-pound bag.

Also out on Friday this week is the BLS’s Consumer Price Index, which showed a half-percent gain in February on top of a 0.4 percent hike in January.   The CPI’s detail tables include line items as specific as “bread” or “muffins;” comparing the national shifts with prices at local stores (if you’ve kept track, or if grocers will share their pricing tables) would make for a picturesque and well-read story.

With food among the two most volatile items in the CPI, one question to ask grocers is: How will rising prices affect the loss leaders and sale prices offered to consumers?   And does food inflation ramp up competition among area supermarkets for shoppers, or affect consumer behavior in terms of products selected, time spent shopping, average register receipt, etc.?   Are more private-label goods or generics selling?  Are shoppers going for cheaper cuts of meat and fewer luxury cheeses or desserts?

Here’s a good MarketWatch article about the inflation reports due out this week; keep in mind that the CPI includes the cost of services as well as tangible goods; this report quotes one analyst’s view that rents will show an increase – possibly a good basis for a housing story.   You could build an entire business feature around the costs of an average household’s summer services from child care and summer camps to landscaping to window-washing and air-conditioning related electric bills.