Hooray! The Price of Toilet Paper is Going Up, Are You Cheering Too?

Mish

The Fed is rooting for more inflation. It's coming and the Fed is cheering.

1000 Sheets Will Now Cost More

Huggies maker Kimberly-Clark announced price hikes, joining General Mills, Hormel and others in passing along added costs.

The Fed is undoubtedly pleased that Higher Commodity Costs are Now Passed on to Shoppers. 

Makers of everything from diapers to cereal are starting to feel the strain of higher commodity prices, and some are passing the added cost along to consumers.

Kimberly-Clark Corp. (KMB) said Wednesday it plans to raise selling prices across much of its North America consumer-products business to help counter rising raw-material costs.

Kimberly-Clark said its increases, which will be implemented almost entirely through changes in list prices, are needed to help offset significant commodity cost inflation.

Price Hikes 

  • The maker of Huggies diapers and Scott paper products said the percentage increases would be in the mid- to high-single digits and take effect in late June. They will apply to the company’s baby- and child-care, adult-care and Scott bathroom-tissue businesses.
  • Cheerios maker General Mills Inc. (GIS) said it will raise prices to partly offset higher freight and manufacturing costs, in addition to rising commodity prices. “Our competitors and retailers are facing the same thing we are,” General Mills Chief Executive Jeff Harmening said.
  • Hormel Foods Corp. (HRL)said in February it raised prices of its turkey products, such as Jennie-O ground turkey, to counter sharply higher grain costs. If the rally in the commodity markets were to continue, the company would likely pass along further increases, Chief Executive Jim Snee said. Hormel also raised prices of its Skippy peanut butter.
  • J.M. Smucker Co. (SJM)  said it recently raised prices for its Jif peanut butter and that it might do the same with pet snacks because of higher shipping costs and other inflationary pressure. Smucker Chief Executive Mark Smucker said retailers are passing increases along to consumers. “We only raise prices when costs are meaningfully higher, and we partner with the retailers to make sure it’s justified and that we move together,” he said.

Hooray! Hooray! Hooray!

In addition to toilet paper, price hikes are slated for Huggies, Cheerios, peanut butter, and turkey.

No doubt, that's just a start.

The Fed is very pleased that your dollar buys less than a month ago. Are you cheering  too?

Easy Money Quote of the Day: Fed "Won't Take the Punch Bowl Away"

On March 25, I noted the Easy Money Quote of the Day: Fed "Won't Take the Punch Bowl Away"

San Francisco Fed President Mary Daly won the gold medal for easy money statements.  She said the central bank would show at least “a healthy dose” of patience. ”We are not going to take this punch bowl away,” said Daly.

She wants higher inflation as do four other Fed presidents I cited. 

Spotlight on the Fed

Fed Chair Jerome Powell wants to let inflation run hot to make for alleged lack of inflation in the past.  

In short, he is unhappy to have failed at destroying the purchasing power of your dollar fast enough.

He would not recognize inflation if it jumped off the table and spit grapefruit juice in his eyes.

As discussed previously, Inflation is Poised to Soar, 3% by June is "Almost Certain"

Historical Perspective on CPI Deflations

A BIS study of deflations shows the Fed's fear of deflation is foolish.

"Deflation may actually boost output. Lower prices increase real incomes and wealth. And they may also make export goods more competitive," concluded the study.

For discussion, please see Historical Perspective on CPI Deflations: How Damaging are They?

Japan has tried what the Fed is doing now for over a decade, with no results.

Yet, Powell hell bent on producing more than 2% inflation until the strategy "works".

It already has, using the word "works" rather loosely.

Home Prices Rise at Fastest Pace in 15 Years

CS National Top 10 Metro CPI OER 2021-01

Inflation is Rampant and Obvious 

Yesterday I commented Hello Fed, Inflation is Rampant and Obvious, Why Can't You See It?

The national level average year-over-year increase in home prices is 11.2%.

Click on the above link for a series of 5 charts that explain what's happening.

What Would I Do?

For the answer, please see Reader Question: What Would I do Differently Than the Fed?

Mish

Comments (34)
No. 1-16
Sechel
Sechel

Start with why is the cost of pulp up?

Though toilet-paper makers have the option to reduce costs by cutting back on the number of sheets and making other quality modifications, price increases are largely expected after the cost of pulp — a wood product — soared by 35% in the last year, Patel said.

Surging pulp is following record-high lumber prices, which have significantly increased the cost of homebuilding and reduced inventories at mills across North America.

Sechel
Sechel

Wood-pulp prices are soaring thanks to speculators in China, with help from paper takeout containers, a weaker dollar and people using restrooms at home instead of at the office.

Bleached softwood kraft pulp futures have risen 48% on the Shanghai Futures Exchange since Dec. 1, to about $1,037 a ton. Meanwhile, producers around the world are boosting prices for the wood mash at unusually sharp rates. Domtar Corp. , based in South Carolina, said it would raise prices this month between $100 and $130 a ton, depending on grade.

“Spot prices are really jumping,” said Brian McClay, a pulp-market consultant and a founder of pricing service Trade Tree Online. “I’ve been in the pulp business since 1978 and have been asking friends: No one has seen this before, no one has seen the scale of this.”

Prices are hottest for softwood pulp, the type that comes from coniferous trees and is used to make products such as premium toilet tissue, paper towels, junk mail and coffee cups. It is made from sawmill scraps as well as from trees too skinny, knotty or crooked to be cut into lumber.

China buys more than one-third of the world’s pulp and churns out paper products and packaging. Shanghai pulp futures, which began trading in 2018, serve as a price guide for an array of varieties and grades, similar to the way that West Texas Intermediate and Brent crude futures are reference points for oil prices.

Sechel
Sechel

So just looking at paper products it's not clear at all this is a Fed story. How about digging into wood pulp and lumber

Sechel
Sechel

Additionally, a massive change in Chinese recycling markets has made yet more waves in the international paper market. China previously took in 55 percent of the world’s scrap paper for recycling, turning it into corrugated containers and cardboard boxes, according to a report from Public Radio International. But as of January, the new environmental regulations prompted Chinese mills to reduce that practice to control pollutants coming into the production stream.

Eddie_T
Eddie_T

My daughter just bought frozen snow crab from Costco for our Easter meal.....$240 for about 10 pounds. Yikes! The crab leg tradition for family meals was started by me when the price was roughly half that.

There is an important lesson here for parents. Whatever traditions you might start, you won't have an easy time backing out of them

Zardoz
Zardoz

I would be ok with the punchbowl, if I ever got any punch.

Eddie_T
Eddie_T

When TP first got scarce, the women in the family bought one of those fake bidets that replaces your toilet seat. Not sure what the payback time is.....how long does $600 worth of toilet paper last?

At the time it was a stroke of genius.

It actually works well, but it requires an electrical outlet, which many WC's don't have. If I build another house I'll make sure to have one behind the toilet.

It has a remote control which means I usually use one of the other bathrooms....I don't need that kind of complexity in my life.

FromBrussels
FromBrussels

Want a uncomplicated, relatively safe 7% interest on your savings ? Buy turkish US$ sovereign bonds, I did! Don t think Turkey will go bust any time soon with a impressive vibrant economy, low debt rate and a young population ! *Past performance is (of course) no guarantee for future results.... just in case you d think of suing me if things went wrong :-) ...

shamrock
shamrock

The inflation is not coming from higher labor costs? Who could have seen that coming?

Rbm
Rbm

Mish do you think the wheels will come off if the fed allowed housing and the stock market to deflate.

bluestone
bluestone

The problem with the bog roll is that its pretty easy, because its in that price point, for people to just buy a whole load in anticipation and then consumables in the US will be off to the races.

Jojo
Jojo

Buy bidet stocks!

As I have posted previously, we will not get true inflation statistics from the government when the government stands to benefit by reporting that inflation remains lower than ever.

The way to correct this problem is to convene an independent board that produces and release official inflation statistics that the government and industry must accept.

Democritus
Democritus

Reading articles here for some 10 years... It amazes me how we see analysis after analysis of the FED, of corrupt politics, of media bias, of middle-east wars... It only takes just one assumption and the whole picture becomes clear but it's too politically incorrect even here.

Doug78
Doug78

The price of toilet paper has gone up but the price of illegals has gone down due to an increase of supply so according to free market principles inflation in one area will be compensated by a drop in another. In old times before toilet paper well-off people would have servants wipe for them. We could do the same thing today and thereby nullify the nefarious effect of inflation on this most necessary item while at the same time providing meaningful employment to the newly-arrived.

Bam_Man
Bam_Man

"Your standard of living will collapse. And you'll be happy."

anoop
anoop

unfortunately, research has shown that people are pooping a lot less than thought, so the contribution to the cpi from toilet paper is essentially flat.


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