Why American Consumers Are About To Be Blindsided By An Inflationary Shockwave

While unsuspecting U.S. consumers continue to expect low, sub-2% inflation according to the latest YTD low breakeven rate, little do they know they are about to be blindsided by a coming inflationary shock, according to a new WSJ reportwhich notes that many U.S. consumer staple and industry-leading companies are either already in the process of raising prices, or have set concrete plans to do so in the very near future.

Once these price increases are passed through to consumers, it will likely mark the end to a long period of "low inflation" that the Fed has constantly leaned on as an excuse to keep rates low for nearly a decade.

Take Clorox for example, which is raising prices on everyday products like cat litter. Coca-Cola also reported higher prices for the past quarter. Mondelez International also plans to raise prices in North America next year according to an interview with its CEO on Monday. The food giant said that it is passing along rising costs, including ingredient and transportation costs, to consumers.

Airlines are also passing on costs as they are paying about 40% more for jet fuel than they were a year ago. Delta, jetBlue and American have all raised fees, fares, or both. Trucking costs were up 7% annually in September and private sector wages and salaries in the September quarter rose 3.1%.

Arconic was able to widen its operating margins this past quarter on its aluminium products by using tariffs to justify price hikes. Manufacturers are paying about 8% more for aluminium and 38% more for steel than they were a year ago. Looming potential tariffs with China to the tune of $200 billion also continue to weigh on input costs.

Even such supposedly immune to day-to-day price fluctuation companies as Apple ,recently raised prices on its new MacBook Air and iPad Pro products by between 20% and 25%.

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