Food for thought: General Mills, Kraft to raise cereal prices

Your Cheerios might get a bit more expensive next month. WSJ has the scoop:

General Mills Inc. said it will increase prices next month on a quarter of its breakfast cereals as a result of rising grain and other commodity prices, illustrating the pressures more companies face to pass along sharply higher costs on everything from corn to copper.

The Minneapolis food supplier said some cereals will increase by a “low single-digit” percentage rate effective Nov. 15. Kraft Foods Inc. is also raising prices, according to people familiar with the matter, although its scope wasn’t clear. A Kraft spokesman declined to comment.



Ruh Roh! Long treasury bonds are sinking.

As my colleague Duru pointed out to me the other day, the long bond is looking a little sickly lately. Indeed, the iShares Barclays 20+Year Treasury Bond Fund (ticker: TLT) is down nearly 10 percent since its late August 2010 highs:

The bond market is not betting on deflation–at least not in the long run.

Get ready to pay more for a Big Mac

The Wall Street Journal’s Paul Ziobro reports that McDonald’s Corp. is planning to raise menu prices in the U.S. and Europe:

The company expects to increase prices in the U.S. and Europe amid projections that commodity costs will rise between 2% and 3% in 2011, Chief Financial Officer Peter Bensen said Thursday during a conference call after McDonald’s reported a 10% increase in third-quarter earnings and added that October sales appear strong.”



U.S. dollar at nine-month low

The greenback isn’t looking too strong of late:

Declining Dollar

Most likely, the sinking U.S. dollar means that American consumers will soon be paying more for imported goods. It will also raise the cost of manufacturing in the U.S. to the extent that American manufacturers rely on imported inputs, such as oil.

Freight prices rising; Sen. Rockefeller says Congress must intervene

To the chagrin of West Virginia Sen. Jay Rockefeller, rising freight costs are a reality:

  • Nike Chief Executive Mark Parker said yesterday that  “rising freight, labor and oil costs are likely to add pressure to future results.”
  • Levi Strauss & Co. said earlier this week that it is raising prices on some products to cover rising costs “for raw materials such as cotton as well as for labour and freight.”
  • Across the pond, Associated British Foods said earlier this month that “high cotton prices and freight costs will put pressure on profit margins next year.”
  • Back in the U.S., ethanol producers are warning of higher shipping costs too: “Going forward, exports will be affected by an increase in shipping rates[.]  Container rates are expected to increase Oct. 1 by $300-400 per container. Rail rates will take an annual new crop increase, and physical rail cars themselves are tight and expensive.”

(Emphasis added.)

I’ll leave it to Inflation Watch readers to decide whether Congress should regulate railroad freight prices, as Sen. Rockefeller proposes.

What is going on with cotton prices?

Notwithstanding a pullback the past two days, cotton prices have been on a tear lately, recently surpassing $1 per pound for the first time since the 1990s. From various news reports, it appears that the surge is due to  recent floods in Pakistan coupled with unusually strong demand in China and elsewhere for cotton fiber and yarn. It will be interesting to see whether textile producers and clothing retailers can pass along higher prices to consumers.

Gold prices continue to rise

The price of gold, which has nearly doubled in the past two years, hit another all-time high yesterday.