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Companies Forced To Charge Consumers More Money

Published 07/02/08 Jeff Bennett - Print Article
E-mail - editor@economyincisis.org

Companies are looking for ways to offset the rising price of gas and other resources while still maintaining a profit margin, meaning, consumers can expect to pay more for goods.

The slowing economy is not only forcing consumers to find ways to curb spending, but now businesses are forced to charge more to stay afloat. This comes as a risky move as the declining dollar is causing everything else to become more expensive. Hopefully this does not destroy consumer confidence completely.


Source Reuters:

The moves are a sign that companies are running out of ways to offset the rise in key costs including oil, natural gas, steel and aluminum, while betting their customers will have little choice but to accept higher prices.

"Initially they tried to manage their profitability through productivity improvements, becoming more efficient, some cost cutting. But now with the extent of the rise in raw material costs, that's just not sufficient," Spieler said. "The interesting part will be how much the prices that they're increasing will stick in a pretty tough economic environment."

But any time a business raises prices it runs the risk of losing sales. The fact that companies are moving to raise prices suggests they may be looking to protect profit margins in the face of a slowing U.S. economy.


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