Inflation: Company executives plan more price hikes
Yahoo Finance Live's Julie Hyman and Brian Sozzi discuss what corporate executives are saying about raising prices amid surging inflation and the Fed's plans for a rate hike.
Video Transcript
JULIE HYMAN: Well, one of the reasons that all of this has come to a head, one, it's yes, yesterday CPI print. But it's also the drumbeat of company after company after company talking about raising prices. We talked to some executives that are doing that over the past week.
JACK HARTUNG: At least for the next two, three, maybe even four quarters, I don't see prices retreating. I don't think labor is going down in the near term. And I don't see in terms of all the ingredients that we buy, our beef, our chicken, we don't see those ingredients really retreating until at the earliest, the end of 2022, maybe even into 2023.
DAVID GIBBS: But as we work through this environment, we also know that we're going to have to continue to adjust our model to preserve the profitability at the restaurant level.
HUGH JOHNSTON: Based on what we see right now, yeah, it's going to be high single digits to 10%. And that is very much a function of the input costs going up as much as they are.
YNON KREIZ: We did raise prices in the third quarter of last year, and it is one of the options we consider given these times of inflation. But when we raise prices, we always keep consumers in mind. We are being very thoughtful and are committed to maintaining the highest quality and the best value for consumers.
JULIE HYMAN: That is just a sampling because as we know, Sozz, there have been so so many companies that have been doing this. And the question that we've been discussing among other things, is when will consumers push back? It hasn't really seemed to have happened, at least not the critical mass as of yet. And as we heard from those executives, it doesn't seem to be abating right now.
BRIAN SOZZI: Yeah, I just want to go back to what PepsiCo CFO Hugh Johnston said, I've covered PepsiCo probably, probably 10 or 11 years. I have never seen a company of that stature come out here on live TV and say, hey, we might raise our prices 10% this year. But I think it really underscores the legitimate pressure a lot of big companies are in terms of labor, transportation. If you're a food company, grains, cooking oils, you name it, these costs are going upwards of 20%, 30%, 40%, 50% in some cases, and they have no other choice. They are publicly-traded companies, they're trying to protect their profit margins. And we, the consumers, are going to have to bear the brunt of it.
But you know, just staying on inflation, of course, that's why you're seeing a lot of folks out here on the Street come out here this morning and lift their rate hike expectations. Goldman Sachs, Jan Hatzius, he was at five rate hikes a couple of weeks ago. He is at now seven rate hikes for this year I've also read a couple of notes that perhaps you see an interim meeting emergency rate cut-- rate hike, a rate hike before the Fed meets in mid-March.
JULIE HYMAN: Although, right, as Brian Cheung just pointed out to us, that would be-- that--
BRIAN SOZZI: Hasn't happened since '94.
JULIE HYMAN: --we can put that to bed right now. It's not-- it's not going to happen. Let's just put that to bed right now. There's not going to be an emergency rate hike. Like you know, I don't make predictions, I'm making that prediction. It's not-- it's not happening.
BRIAN SOZZI: OK. I would tend to agree with you. I would tend to agree, Julie. I think you would have to see really just more startling signs of price increases. Now, the CPI is not helping matters anymore but still, I think you would need to see 10% plus on the CPI headline to even think about an inter-meeting rate hike from the Federal Reserve, at least ahead of March.
JULIE HYMAN: Yeah, I think or you would have to have some sort of exogenous shock that has nothing to do with any of this, right? That would cause some sort of tailspin, so-- or spike or whatever it may be.
