Create a free account to continue

Feeling The Pinch

I can’t seem to avoid reading articles or seeing reports about companies who are being forced to raise prices because the cost of raw materials has increased.

By Lauren Kiesow, Associate Editor,

Like it or not, I’m on a budget. A very tight budget, in fact. From rent and a car payment to student loans and groceries, all of the totals add up, leaving little for nights out or an impromptu shopping trip. And while my household is fortunate to have two incomes, in recent months we’ve started to experience a monetary pinch.

Lately, the pool of “fun money” seems to be getting smaller and smaller. While certain bills are a fixed cost, expenditures such as groceries, gas, and utilities are volatile. I’d rather not pay bills, obviously, but if I have to, knowing I can count on a static price is reassuring. That minute amount of control is empowering, but nothing shakes my resolve quicker than the livewire bills in my life. From month to month, I’ve seen the non-price-fixed bills slowly rise, encroaching on my leftovers pot.

Aside from feeling the hit at the pump, my most recent fiscal episode deals with the cost of groceries. I’m privy to the current economic state, so I headed to the grocery store armed with what I deemed to be an acceptable amount of cash for the needed comestibles. But when the cashier announced my total, it was nearly twenty dollars more than I expected. Stocking up on the basics had never been so depressing. Learning that the price hikes are due in part to February’s 3.9 percent increase in the cost of wholesale food astonished me. So much for being “in the know.”

That extra twenty may not seem like much, but a little extra for this and a little extra for that really begins to add up. As the saying goes, all work and no play makes Jack a very dull boy, and I’d prefer to avoid dullness. But at this rate, it might be unavoidable.

Admittedly, my fiscal stress is relatively tame to what a lot of individuals and manufacturers are currently experiencing. I can’t seem to avoid reading articles or seeing reports about companies who are being forced to raise prices in the coming months because the cost of raw materials has increased. When the price of one component increases, it’s a sound bet that the consumer will feel it in the end.  It’s a vicious, unavoidable domino effect.

A quick glimpse at recent headlines reveals that Proctor & Gamble, Hershey, GM, and Johnson & Johnson are just a smattering of businesses feeling the pressure to raise prices if they want to remain profitable. Rising fuel and labor costs are a large part of the issue, but natural disasters such as the recent earthquake and tsunami in Japan don’t help the supply issue, either. Ultimately, these companies’ budgets become irrelevant, and it’s hard to make up the lost ground without impacting consumers.

Clearly, this financial pinch is worrisome -- and not just on my micro level. Sure, manufacturers can continue to raise prices in order to cope with rising costs, but at some point consumers might say no to the product entirely. They’ll either find a viable substitute or simply do without. So then what? Will some manufacturers take other shortcuts to keep the product’s cost consumer-friendly, sacrificing quality and safety? I sure hope not, but the applicability of “desperate times call for desperate measures” has greatly increased. Now more than ever is the time for tighter quality controls to assure that consumers aren’t taken advantage of or put in harm’s way.